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Question 5 At a selling price of 500, KLD can sell 2,000 units of its new product Z in one month. The demand for
Question 5 At a selling price of 500, KLD can sell 2,000 units of its new product Z in one month. The demand for the product is expected to fall to 1600 units, if the selling price increases to 540. The variable cost of product Z is 230. Required Calculate the selling price and quantity that would maximise profits. ANSWER: Question 6 ABC is a manufacturing company. It is currently reviewing its performance in respect of quality costs. Extracts from the company's records from each of the previous years are as follows: 2021 2020 (000) (000) Warranty repairs 1,700 3,500 Quality training 4,600 3,300 Inspection of raw materials 3,600 2,800 Reinspecting previously faulty products 4,200 8,500 Finished goods inspections 5,700 4.200 Scrap cost of internally detected faulty 2,900 6,000 products Preventative machine maintenance 6,400 5,000 Forgone contribution from loss of sales 900 1,300 Required: (6 marks). I. Considering each of the two years, produce a cost of quality report using the four recognized headings. II. Discuss the outcome of the report and show how the improvement/deterioration in ABC's performance can affect the long- term reputation and financial outcomes of the company. (7 marks)
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