Alpha company is planning a new product. Market research information suggests that the product should sell 20,000 units at $260.00/unit. The company seeks to make a mark-up of 30% product cost. It is estimated that the lifetime costs of the product will be as follows:

Design and Development costs

500,000

Manufacturing cost

1,000,000

End of life costs

200,000

Requirement:

1. Calculate the target cost per unit of the product

2. Calculate the cost per unit of the product as per LLC and compare with the target cost

3. Conclude on the product making decision, whether it is advisable to make it or not with reasons.