Question 1

Section A

EduTech Solutions is developing a new online certification course. The market research indicates that the maximum price students are willing to pay is $150. The company requires a profit margin of 20% on the selling price. The estimated current cost to deliver the course is $135 per student.

What is the target cost gap per student?

Accepted Answer

1. Calculate the required profit. 2. Calculate the target cost (Selling Price - Required Profit). 3. Calculate the cost gap (Estimated Cost - Target Cost).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating the profit margin as a mark-up on cost, or selecting the target cost instead of the gap.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA PM — Performance Management Practice Exam 3

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