(iii) Identify and discuss an alternative strategy that may assist in improving the performance of CTC witheffect from 1 May 2009 (where only the products in (a) and (b) above are available for manufacture).(4 marks)

正确答案：
(iii) If no new products are available then CTC must look to boost revenues obtained from its existing product portolio whilst
seeking to reduce product specific fixed overheads and the company’s other fixed overheads. In order to do this attention
should be focused on the marketing activities currently undertaken.
CTC should consider selling all of its products in ‘multi product’ packages as it might well be the case that the increased
contribution achieved from increased sales volumes would outweigh the diminution in contribution arising from
reductions in the selling price per unit of each product.
CTC could also apply target costing principles in order to reduce costs and thereby increase the margins on each of its
products. Value analysis should be undertaken in order to evaluate the value-added features of each product. For
example, the use of non-combustible materials in manufacture would be a valued added feature of such products
whereas the use of pins and metal fastenings which are potentially harmful to children would obviously not comprise
value added features. CTC should focus on delivering ‘value’ to the customer and in attempting to do so should seek to
identify all non-value activities in order that they may be eliminated and hence margins improved.