This preview shows page 1. Sign up to view the full content.
Unformatted text preview: to be completed in the primary
market area. Mapco plans to charge RM50 for its trimmer. The Surefire
trimmer is expected to sell for RM55.
i. What sales are forecast for 2006 under these conditions?
[5 marks] ii. If its competitor cuts the price of the Surefire trimmer to RM50, what effect
will this have on Mapco’s sales?
[5 marks] iii. What effect would a 30 percent reduction in the number of new homes
completed have on Mapco’s sales (ignore the impact of the price cut of
the Surefire trimmer)?
[5 marks] [TOTAL : 20 MARKS] 9 BMME5103/SEPT 07-F/KN Question 2
a) Define and compare the following types of costs:
i. Sunk cost versus incremental cost
[2.5 marks] ii. Fixed cost versus variable cost
[2.5 marks] iii. Incremental cost versus marginal cost
[2.5 marks] iv. Opportunity cost versus out-of-pocket cost
[2.5 marks] b) State which of the costs in question 2(a) are considered “relevant” and which
are considered “irrelevant” to a business decision. Sta...
View Full Document
- Spring '14