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Question 8 The Managing Director at G Ltd is examining the projected figures in relation to the new cost 'WristFit' (the WristFit being a
Question 8 The Managing Director at G Ltd is examining the projected figures in relation to the new cost 'WristFit' (the "WristFit being a fitness tracking monitor, to be worn around the wrist, with a related app to record the data and monitor the user's progress): Material cost 12 per unit (purchased in small quantities); Selling price per unit 60; . . Direct labour cost 15 per unit (assembly of the 'Wristfit' being relatively labour intensive); Annual fixed costs of 170,000 are expected in direct relation to this product; Annual sales forecast 10,000 units; . Target contribution/sales (C/S) ratio of 60% Target net profit margin of 30%. Required (a) Use calculations to assess whether the targeted returns are going to be achieved for the 'Wristfit'. (8 marks) (b) Suggest and justify THREE areas in which cost savings could be made by G Ltd. (6 marks) (maximum 300 words) (c) Discuss ONE Balanced Scorecard perspective under which the performance of the 'Wristfit' could be managed. (4 marks) (maximum 200 words) (d) Explain how the concept of 'Kaizen' could be used in conjunction with target costing in improving the performance of the 'WristFit'. (7 marks) (maximum 350 words) (Total: 25 marks)
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