QUESTIONS $3$

$[8$ Marks$]$

Using the information provided below, answer the following question.

INFORMATION

Lum$$ Gems $($Lum$)$ is an innovative manufacturer of modern jewellery in a Southern African Country. Based on the results of an extensive market research, the finance manager has established a target selling price of R$7400$ for a newly developed necklace. Lum$$ has estimated total sales volume of $35000$ units of the necklace across the African Continental Free Trade Area $($AfCFTA$).$ Lum$$ has set a target profit margin of $30\%.$

Informed by the data gathered so far, the finance manager has projected the following:

$\backslash$table$[[$Production costs per unit,R$],[$Direct material,$1570]]$

$\backslash$table$[[$Direct labour,$875],[$Direct machining and polishing,$760],[$Machinery set$-$up$,185],[$Inspection and testing,$410],[,],[$Total non$-$production costs,R$],[$Design $($salaries and technology$),37500000],[$Marketing consultants,$5300000],[$Distribution$,6600000]]$

REQUIRED:

$3\mathrm{.}1.$ Determine the projected cost gap per unit of the new necklace.

$(5)$

$3\mathrm{.}2.$ Through a comprehensive review of cost and management accounting literature, explore three viable strategies to mitigate the cost gap identified in $3\mathrm{.}1($Please ensure to include relevant in$-$text citations to substantiate your analysis$).$

$(3)$

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