A cost management system A) Is finalized when the information currently being pr

Question

A cost management system A) Is finalized when the information currently being produced is the same as the nformation B) Can be aly designed to fit the information needs of the majority of domestie (but not C) Must be continuously mproved to adapt to changes in an organization's internal and external D) That has been appropriately designed from gap analysis, does not need to be changed unless currently desired global) organizations environment there is a change in organizational management or culture. A firm sells three products in the ratio of 3:2:6 and each contributes s10, $25, ond $30 respectively. Fixed costs are 119.600 What is the breakeven point in batches 1,840 CL,380 dl How many units of each product must be sold to earn s39,000? 900 3,660 2,760 14,640 4SO; 300 b.1,830 C1380; d7 320 920 4.880 Transfer pricing policy can be lnked to two types of strategic decision. These are decisions and decisions. nce A pricing: performa B. sourcing: investment C. pricing: sourcing D. performance: investment

Explanation / Answer

1). A cost management system:
c). must be continuously improved to adapt to changes in an organization's internal and external environment.
because cost management is the process of planning and controlling the budget of the business. It involves estimating the changes in environment and predicting their impact on cost structure according to which budgets are developed to help the business creating the standard and managing the costs and reducing the chances of going over budget.

2). Let the no. of units be x then the ratio be: 3x : 2x: 6x. It means if Units sold of product 1 is 3x then product 2 is 2x and product 3 is 6x
Calculation of total contribution 3x * 10 = 30x
product 2 = 2x*25 = 50x
product 3 = 6x*30 = 180x
At breakeven Contribution is equal to fixed costs:
30x + 50x + 180x = 119600
260x = 119600
x= 460
Breakeven units:
Product 1 = 3*460 = 1380
Product 2 = 2*460 = 920
Product 3 = 6*460 = 2760
Total breakeven point = 5060 units

b). Units required to earn $39000
30x + 50x +180x = Fixed cost + profit = 119600+39000
260x = 158600

4). Tansfer pricing involves Pricing and performance decisions.
x= 610
Units of product 1 = 3*610 = 1830
product 2 = 2*610 = 1220
product 3 = 6*610 = 3660

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