ased on rice ch table paci the QUESTION 2 This question consists of two unrelated parts. PART A Rugged footwear CC has designed and developed a new hiking sandal, Trudgers which is ready to be introduced to the market. The projected standard costs for each pair of Trudgers are as follows: Direct materials Direct labour Manufacturing overheads (20% variable) Total standard manufactured cost per pair 25 Marks (45 minutes) 0.25 hours 0.25 hours Standard rate ($) 2.1. 2.2. 2.3. 120.00 160.00 Standard cost ($) 120.00 30.00 40.00 190.00 The following additional information relating to Trudgers is available: Annual fixed selling, administrative and general costs are N$560 000 As the firm manufactures a wide range of other products, managements expect the number of units produced and sold to be 5 000 units 5%6 x 012024010 012531250 An investment of $900 000 in new equipment and working capital will be required for the new line. The owners of Rugged footwear CC requires a return on investment (ROI) of 24% on new products REQUIRED assume the firm uses cost-plus pricing approach. Calculate the mark-up based on variable cost. Calculate the mark-up based on full cost. Using the mark-up calculated above in (2.1) and (2.2.), calculate the selling price for one pair of Trudger based on variable cost and full cost. 2.4. Give four reasons why using cost-plus pricing is often criticized. TOTAL MARKS Marks 222 4 10 ation re -manufa ked sell be: es a ct l ers ts a r

25 Marks ( 45 minutes) This question consists of two unrelated parts. PART A Rugged footwear CC has designed and developed a new hiking sandal, Trudgers which is ready to be introduced to the market. The projected standard costs for each pair of Trudgers are as follows: The following additional information relating to Trudgers is avallable: 01200 - Annual fixed selling, administrative and general costs are N\$560 000 - As the firm manufactures a wide range of other products, managements expect the number of units produced and sold to be 5000 units 506x0,1251250 An investment of $900000 in new equipment and working capital will be required for the new line. The owners of Rugged footwear CC requires a return on investment (ROI) of 24% on new products