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A company has the capacity of production of 80,000 units and presently sells 20,000 units at ?100 each. The demand is sensitive to selling price and it has been observed that with every reduction of ?10 in selling price the demand is doubled. What should be the target cost at full capacity if profit margin on sale is taken as 25%?

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Syllabus (with weightage)
A. Cost Management 20%
B. Strategic Cost Management Tools and Techniques 50%
C. Strategic Cost Management - Application of Statistical Techniques in Business Decisions 30%

Related Test: CMA Intermediate Exam: Cost and Management Accounting


A company has the capacity of production of 80,000 units and presently sells 20,000 units at ?100 each. The demand is sensitive to selling price and it has been observed that with every reduction of ?10 in selling price the demand is doubled. What should be the target cost at full capacity if profit margin on sale is taken as 25%?






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