Question 3 Hub Limited manufacture disposable plastic cups. The firm is planning to produce disposable paper cups for KFC, MacDonald etc. development of Page 3 of 4 ACC200321R the new paper cups is to begin shortly and Hub is in the process of determining the price of the pack. It expects the new product to have the following costs: Units manufactured and sold 2023 20,000 $ 2024 5,000 $ R&D costs Marketing costs Production cost per unit Customer service costs per unit Disposal of specialist equipment 2021 2022 2,000 15,000 $ $ 1,900,000 100,000 100,000 75,000 500 450 50 40 50,000 400 40 10,000 450 40 300,000 The marketing director believes that customer will be prepared to pay $500 for a pack of disposable paper cups, but the financial director believes this will not cover all of the costs throughout the lifecycle. Required: 3.a Calculate the cost per unit looking at the whole life cycle and comment on the suggested price. (15 marks) 3. b Briefly discuss relevant costs and explain why sunk/committed costs cannot be a relevant cost. (10 marks) Total marks (25 marks)