Firms D, E and F are three companies in an industry producing product P. Each company is selling P at the current market price of $16 per unit. Each firm has the same 80% cost experience curve, based on millions of units - ie, the cost of the second millionth unit will be 80% of the cost of the first millionth unit. Other data relating to their respective positions are as follows: D E F Accumulated production (units) 10 million 4 million 2 million Current market share 50% 20% Current unit cost $10.00 $12.00 $16.00 30% Required: (a) Calculate the unit profit currently being earned by each company. (3 marks) (b) D wishes to analyse the likely future situation in the market. By the time D's experience doubles to 20 million units, compute the accumulated experience of E and F? (4 marks) (c) Using the incremental unit model equation (and expressing experience in millions of units - eg D's current experience is 10), determine the cost after the first million units for each of the companies. What do your answers suggest about the comparability of each company's production plant? Explain with calculation. (5 marks) (d) By the time D's experience doubles to 20 million units, show the computation of the unit cost and unit profit for each company, assuming the selling price is unchanged? (4 marks) (e) Suggest an appropriate strategy for D to follow, rather than wait for the predicted situation to occur. (4 marks) Firms D, E and F are three companies in an industry producing product P. Each company is selling P at the current market price of $16 per unit. Each firm has the same 80% cost experience curve, based on millions of units - ie, the cost of the second millionth unit will be 80% of the cost of the first millionth unit. Other data relating to their respective positions are as follows: D E F Accumulated production (units) 10 million 4 million 2 million Current market share 50% 20% Current unit cost $10.00 $12.00 $16.00 30% Required: (a) Calculate the unit profit currently being earned by each company. (3 marks) (b) D wishes to analyse the likely future situation in the market. By the time D's experience doubles to 20 million units, compute the accumulated experience of E and F? (4 marks) (c) Using the incremental unit model equation (and expressing experience in millions of units - eg D's current experience is 10), determine the cost after the first million units for each of the companies. What do your answers suggest about the comparability of each company's production plant? Explain with calculation. (5 marks) (d) By the time D's experience doubles to 20 million units, show the computation of the unit cost and unit profit for each company, assuming the selling price is unchanged? (4 marks) (e) Suggest an appropriate strategy for D to follow, rather than wait for the predicted situation to occur. (4 marks)