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Business
Accounting
20.

20.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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20.
Beta company is planning a new product. Market research information suggests that the product should sell 3000 units at $210.00/unit. The company seeks to make a mark-up of 20% product cost. It is estimated that the lifetime costs of the product will be as follows: Design and Development costs 250,000 Manufacturing cost 160,000 End of life costs 50,000 Requirement: 1. Calculate the target cost per unit of the product 2. Calculate the cost per unit of the product as per LLC and compare with the target cost 3. Conclude on the product making decision, whether it is advisable to make it or not with reasons.
Transcribed Image Text:Beta company is planning a new product. Market research information suggests that the product should sell 3000 units at $210.00/unit. The company seeks to make a mark-up of 20% product cost. It is estimated that the lifetime costs of the product will be as follows: Design and Development costs 250,000 Manufacturing cost 160,000 End of life costs 50,000 Requirement: 1. Calculate the target cost per unit of the product 2. Calculate the cost per unit of the product as per LLC and compare with the target cost 3. Conclude on the product making decision, whether it is advisable to make it or not with reasons.
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