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Al Dhofar Medical Equipment Company manufactures digital Thermo scanner and preparing a product life cycle budget for new Thermo Scanner TS3. Development on the new
Al Dhofar Medical Equipment Company manufactures digital Thermo scanner and preparing a product life cycle budget for new Thermo Scanner TS3. Development on the new Thermo Scanner is specially designed to meet the needs of Covid-19 requirements and with additional features like crowd screening for Cruise Ships, Schools, Offices and Universities. It expects to have a product life cycle of 5 years. Estimates of the new product will have the following costs: Details Research and Development Costs Advertisement costs Manufacturing cost per unit Market service costs per unit Disposal Cost Production Units Year 1 Year 2 Year 3 Year 4 Year 5 OMR OMR OMR OMR OMR 60,000 45,000 15,000 30,000 22,500 15,000 60,000 225 173 120 135 66 108 126 129 1,500 1,200 2,700 3,600 600 Mr. Mohammed who is the Marketing Manager of the company believes that customers will be ready to pay OMR 250 for a Thermal Scanner, but Mr. Jasim who is the Finance Manager of the company believes that it will not cover up all the cost throughout the life cycle of the product. You are required to comment which opinion is the most accurate among those two by determining cost per unit according to Life Cycle Costing. Page 2 of 4
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