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Amazon is exploring the costs associated with launching a new delivery drone service. The development costs are $300 million, and each drone costs $10,000 to

Amazon is exploring the costs associated with launching a new delivery drone service. The development costs are $300 million, and each drone costs $10,000 to manufacture. Amazon expects to deploy 10,000 drones annually, supporting $500 million in additional delivery revenue.

Requirements:

  • Present the development costs and variable manufacturing costs in a table format.
  • Calculate the total investment and variable costs for manufacturing the drones.
  • Determine the contribution margin per drone and total contribution margin.
  • Analyze the market demand and regulatory challenges for drone delivery services.
  • Discuss the strategic advantages of integrating drone technology into Amazon's logistics.
  • Evaluate the financial implications of the drone service on Amazon's profitability.

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