INOVAT Ltd is a Durban based company that specialises in the manufacturing of phone covers for a variety of phone brands. They are launching a new, innovative phone cover onto the market and they are trying to decide on the right launch price for the phone cover. The phone covers' expected lifespan is three years. Given the high level of costs which have been incurred in developing the phone cover, INOVAT Ltd wants to ensure that it sets its price at the right level and has therefore consulted a market research company to help it do this. The research, which relates to similar but not identical phone covers launched by other companies, has revealed that at a price of R60, annual demand would be expected to be 250,000 units. fall by 2,000 units and for every R2 decrease in selling price, demand would be expected to increase by 2,000 units. A forecast of the annual production costs which would be incurred by INOVAT Ltd in relation to the new phone cover are as follows: a) Calculate the total variable cost per phone cover and total fixed overheads. b) Calculate the optimum (profit maximising) selling price for the new phone cover and calculate the resulting profit for the period. Note: If P=abx then MR=a2bx. c) The sales manager is not convinced that the sales price calculated in (b) above is the right one to charge on the initial launch of the new phone cover. He believes that a high price should be charged at launch so that those customers prepared to pay a higher price for the cover can be 'skimmed off' first. Discuss the conditions which would make market skimming a more suitable pricing strategy for INOVAT and recommend whether INOVAT should adopt this approach instead