Image Limited has been manufacturing commercial photo copiers for over 50 years and the directors are currently considering introducing 3D copiers to the company's product range. The 3D copier would come in two specifications each involving a different cost base because of the quantity of material and direct labour needed. The sales and production teams commissioned a feasibility study which has come up with the following estimates:

4 The projected sales (units) for the 3D copiers are as follows:

year 1 year 2 year 3 deluxe model 5600 units 6800 units 8000 units standard model 4000 units 4800 units 5600 units deluxe model standard model selling price per unit $4,000 $2,000 material cost per unit $2,200 $1,000 labour time per unit 60hours 30hours labour cost per hour $14 $14