INFORMATION

Lum$$ Gems $($Lum$)$ is an innovative manufacturer of modern jewellery in a Southern African Country. Based on the results of an extensive market research, the finance manager has established a target selling price of R$7400$ for a newly developed necklace. Lum$$ 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:

$3\mathrm{.}1.$ Determine the projected cost gap per unit of the new necklace. $(5)$

$3\mathrm{.}2.$ Through a comprehensive review of cost and management accounting literature, explore three viable strategies to mitigate the cost gap identified in $3\mathrm{.}1($Please ensure to include relevant in$-$text citations to substantiate your analysis$).(3)$