Case Study 2: Success Electronics LLC is planning to introduce a low cost smart phone with attractive features. The market research information suggests that the product should sell 2000 units at RO 30 per 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 RO 5000 Manufacturing costs RO 22 per unit End of life costs RO 7000 Based on the above case, answer the following THREE questions:

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Chapter1: Financial Statements And Business Decisions
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Case Study 2:
Success Electronics LLC is planning to introduce a low cost smart phone with attractive features. The market research information suggests that
the product should sell 2000 units at RO 30 per 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 RO 5000
Manufacturing costs RO 22 per unit
End of life costs RO 7000
Based on the above case, answer the following THREE questions:
Transcribed Image Text:Case Study 2: Success Electronics LLC is planning to introduce a low cost smart phone with attractive features. The market research information suggests that the product should sell 2000 units at RO 30 per 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 RO 5000 Manufacturing costs RO 22 per unit End of life costs RO 7000 Based on the above case, answer the following THREE questions:
What is target cost per unit to achieve the desired profit?
O a. RO 20 per unit
O b. RO 22 per unit
Oc. RO 25 per unit
O d. RO 24 per unit
What is the desired profit per unit?
O a. RO 6 per unit
O b. RO 15 per unit
O c. RO 10 per unit
O d. RO 5 per unit
What is the original lifecycle cost per unit and is the product worth making on that basis?
RO 28 per unit; The product is not worth making
O b. RO 29 per unit; The product is not worth making
RO 24 per unit; The product is worth making
O d. RO 23 per unit; The product is worth making
O c.
Transcribed Image Text:What is target cost per unit to achieve the desired profit? O a. RO 20 per unit O b. RO 22 per unit Oc. RO 25 per unit O d. RO 24 per unit What is the desired profit per unit? O a. RO 6 per unit O b. RO 15 per unit O c. RO 10 per unit O d. RO 5 per unit What is the original lifecycle cost per unit and is the product worth making on that basis? RO 28 per unit; The product is not worth making O b. RO 29 per unit; The product is not worth making RO 24 per unit; The product is worth making O d. RO 23 per unit; The product is worth making O c.
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