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A company is planning a new product. Market research information suggests that...

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Accounting

A company is planning a new product. Market research information suggests that the new product
will sell 10,000 total units at a price of $21.00 per unit. The company estimates the lifetime costs of
the product as follows:
The company estimates that if it were to spend an additional $15,000 on design, then manufacturing
costs could be reduced.
a) What is the target cost of the product if the company seeks a markup of 40% of product
Round answer to two decimal places. $
Given the target cost, would you expect the company to launch the product?
b) What is the maximum allowable product manufacturing cost per unit if the company seeks a
markup of 40% of the original life-cycle cost?
Round answer to two decimal places. $
Using the total life-cycle cost to determine target product cost, would you expect the company
to launch the product?
c) Assume the additional $15,000 was spent on design. By how much would the design changes
need to reduce the per unit product cost to meet the goal of a 40% markup on total
life-cycle costs?
Round answer to two decimal places. $
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