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Subject P2: Advanced Management Accounting

A HR aspects have been considered in Inbound Logistics, Operations and
Outbound Logistics but not Marketing or Service.

B Value is added to the customer by not investing in up to date technology
and so allowing Millie to keep prices competitive.

C Millie Ltd focus on differentiation style factors to add value to the
customer.

D Their level of customer service in sales & design is one of the keys to
making sales.

3.3 Company B is about to being developing a new product for launch in its existing
market. They have forecast sales of 20,000 units and the marketing department
suggest a selling price of $43/unit. The company seeks to make a mark-up of
40% product cost. It is estimated that the lifetime costs of the product will be as
follows:

1 Design and development costs $43,000

2 Manufacturing costs $15/unit

3 Plant decommissioning costs $30,000

The company estimates that if it were to spend an additional $15,000 on design,
manufacturing costs/unit could be reduced.

What is the life cycle cost?

A $18.65

B $22

C $22.87

D $24

3.4 A customer is considering buying a new car and has calculated that it
would save her $5,500 of train fares over the next year. Within the
framework of value analysis what kind of value does this figure
represent?

A Cost value

B Exchange value

C Use value

D Esteem value

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