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Question 3: (12 marks) (B1, CI) Part A: (4 marks) The selling price of Product X is set at $550 for each unit and
Question 3: (12 marks) (B1, CI) Part A: (4 marks) The selling price of Product X is set at $550 for each unit and sales for the coming year are expected to be 800 units. A return of 30% on the investment of $600,000 in Product X will be required in the coming year. What is the target cost for each unit of Product X? Part B: (8 marks) Ahlia Company are in a high-tech industry and are often first to market with new technological advances. They have recently spent $100,000 designing and developing a new product. The new product is expected to have a 20-month life cycle. The anticipated performance of this product is as follows: Introduction Growth Sales volume (units) 5,000 Maturity Decline 10,000 30,000 9.000 Per unit (S) Selling price 499 559 349 249 Variable cost 139 233 145 104 Overhead 80 70 50 65 Instructions: Calculate the profitability of the new product.
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