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INFORMATION Lum Gems ( Lum ) is an innovative manufacturer of modern jewellery in a Southern African Country. Based on the results of an extensive

INFORMATION
Lum Gems (Lum) is an innovative manufacturer of modern jewellery in a Southern African Country. Based on the results of an extensive market research, the finance manager has established a target selling price of R7400 for a newly developed necklace. Lum has estimated total sales volume of 35000 units of the necklace across the African Continental Free Trade Area (AfCFTA). Lum has set a target profit margin of 30%.
Informed by the data gathered so far, the finance manager has projected the following:
Production costs per unit R
Direct material 1570
Direct labour 875
Direct machining and polishing 760
Machinery set-up 185
Inspection and testing 410
Total non-production costs R
Design (salaries and technology)37500000
Marketing consultants 5300000
Distribution 6600000
REQUIRED:
3.1. Determine the projected cost gap per unit of the new necklace. (5)
3.2. Through a comprehensive review of cost and management accounting literature, explore three viable strategies to mitigate the cost gap identified in 3.1(Please ensure to include relevant in-text citations to substantiate your analysis).(3)

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