BMAN21040 REPRINT QUESTION 7 A firm that designs highly specialized cameras for the manufacture process involves assessing whether a proposed new product meets a required target- ces i s assessing the viability of a new product One phase in its development of sem cost before its design is finalized and approved for manufacture. The following estimates have been assembled for the new camera product, whidh expected to have an effective sales cycle of only three years is Estimates for Target Cost Analysis Year 1 Year 2 Year Estimated unit sales: Anticipated unit sales price: 100 300 225,000 E200.00 200,000 illion8 milion 8 million R&D costs of camera design: Variable (material Variable (processing) cost per batch: Units per batch: 90000 90,000 80,000 80,000 Joost per nit -wE120,000 100.000 15 4.SxIo Fixed (production capacity) costs: Fixed (marketing) costs: Fixed (warehouse) costs So 5 mion 5 illion 5 illion 1.5 million 1.5 million 1,5 million 2 0.5 million 1million 1.5 million ope 3.86-1o The frm's policy is that a new product should realize a farget net operating income of -14% of of achievement by the firm itself and on benchm industry. In general, failure to meet the target will indicate a need to re-design the product sales lrenie tungspnget sales revenue during the three year period. It is a target based on past levels the ormance andor the means of producing and marketing it. Half of the variable (material purchase) cost per unit relates to generic materials that are commodities bought on world markets, and the remainder to specialized components made by selected suppliers. All of the variable (processing) cost per batch relates to proprietary manufacturing techniques that are crucial to the effectiveness cf the camera product as judged by the end customers. The fixed production, marketing and warehouse costs comprise shares of the total cost of providing these resources that are attributed to the new product REQUIRED: blish whether the proposed camera product will meet the required target income of around 14%. You should clearly show all of your workings. (20 Marks) b) Discuss the issues that should be considered when deciding which types of (10marks) PTO costs to cut so as to meet a target requirement BMAN21040 REPRINT QUESTION 7 A firm that designs highly specialized cameras for the manufacture process involves assessing whether a proposed new product meets a required target- ces i s assessing the viability of a new product One phase in its development of sem cost before its design is finalized and approved for manufacture. The following estimates have been assembled for the new camera product, whidh expected to have an effective sales cycle of only three years is Estimates for Target Cost Analysis Year 1 Year 2 Year Estimated unit sales: Anticipated unit sales price: 100 300 225,000 E200.00 200,000 illion8 milion 8 million R&D costs of camera design: Variable (material Variable (processing) cost per batch: Units per batch: 90000 90,000 80,000 80,000 Joost per nit -wE120,000 100.000 15 4.SxIo Fixed (production capacity) costs: Fixed (marketing) costs: Fixed (warehouse) costs So 5 mion 5 illion 5 illion 1.5 million 1.5 million 1,5 million 2 0.5 million 1million 1.5 million ope 3.86-1o The frm's policy is that a new product should realize a farget net operating income of -14% of of achievement by the firm itself and on benchm industry. In general, failure to meet the target will indicate a need to re-design the product sales lrenie tungspnget sales revenue during the three year period. It is a target based on past levels the ormance andor the means of producing and marketing it. Half of the variable (material purchase) cost per unit relates to generic materials that are commodities bought on world markets, and the remainder to specialized components made by selected suppliers. All of the variable (processing) cost per batch relates to proprietary manufacturing techniques that are crucial to the effectiveness cf the camera product as judged by the end customers. The fixed production, marketing and warehouse costs comprise shares of the total cost of providing these resources that are attributed to the new product REQUIRED: blish whether the proposed camera product will meet the required target income of around 14%. You should clearly show all of your workings. (20 Marks) b) Discuss the issues that should be considered when deciding which types of (10marks) PTO costs to cut so as to meet a target requirement