Question
We have to get this new product and fast, said the Operations Director. Our competitors are close behind us and I believe their products will
We have to get this new product and fast, said the Operations Director. Our competitors are close behind us and I believe their products will be almost as good as ours when they launch them. She was talking about a new product that the company hoped would establish them as the leader in the market. The company had put together a special development team together with their own development laboratory. They had spent 5,000 on equipping the laboratory and the cost of the development engineers would be 15,000 per quarter. It was expected that the new product would be fully developed and ready for launch within five quarters. It would be so through a specialist agency would need to be in place one quarters prior to the launch. Agency charged 15,000 per quarter before launch, 10,000 per quarter during next 2 quarters and 5,000 per quarter afterwards, If the company met their launch date it was expected that they could charge a premium price that would result in profits of approximately 50,000 per quarter. Any delay in the launch would result in profits being reduced to 45,000 per quarter. If this development project were delayed by one quarters how far would the break-even point for the project be pushed back?
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