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A company is planning a new product. Market research information suggests that the new product will sell 1 0 , 0 0 0 total units
A company is planning a new product. Market research information suggests that the new product
will sell total units at a price of $ per unit. The company estimates the lifetime costs of
the product as follows:
The company estimates that if it were to spend an additional $ on design, then manufacturing
costs could be reduced.
a What is the target cost of the product if the company seeks a markup of of product
Round answer to two decimal places. $
Given the target cost, would you expect the company to launch the product?
b What is the maximum allowable product manufacturing cost per unit if the company seeks a
markup of of the original lifecycle cost?
Round answer to two decimal places. $
Using the total lifecycle cost to determine target product cost, would you expect the company
to launch the product?
c Assume the additional $ was spent on design. By how much would the design changes
need to reduce the per unit product cost to meet the goal of a markup on total
lifecycle costs?
Round answer to two decimal places. $
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