2 Half

Question 1

Name 7 factors affecting the pricing decision

Answer 1

Organisational goals
Product mix
Price/demand relationships
Competitors and markets
Marketing Strategy
Cost
Product Life Cycle

Question 2

Price is only one factor in the Marketing Mix, what are the others?

Answer 2

Product, place & promotion

Question 3

Name 3 problems in using relevant costing

Answer 3

if we followed the criteria of relevenace for all our short term decisions we might be in dangerr of not taking into account of and covering our fixed costs
might find it difficult to obtain financial data about the alternatives available
may need to look at non-financial and qualitative factors as well as the financial implications of a decision-may be overlooked/overemphasized by managgers for political reasons.

Question 4

Items that are not relevant

Answer 4

Sunk/past costs that have been incurred
Costs of assets already purchased/research already carried out/specialist advice already paid for
Costs that would be incurred anyway, irrespective of whether the decision is carried out or not
The costs of specialised staff we would keep them on irrespecitve of the decision made if finding replacements would be difficult
Apportionment of costs from other departments

Question 5

Items that are relevant

Answer 5

Additional fixed costs associated with making a decision
Proceeds of selling assets if a decision is not going ahead
Variable costs of making additional output
Costs of buying an asset if the decision is undertaken
Costs of having to forego other income if the decision causes us to use all our capacity
Opportunity costs

Question 6

Formula to calculate cash budgets

Answer 6

Opening balance
+ Receipts
- Payments
=Closing Balance