A company is planning a new product. Market research suggests that demand for the product would last for 5 years. At a selling price of OMR 21.00 per unit they expect to sell 4,000 units in the first year, 6,000 units in the second year and 10,000 units in each of the other 3 years.
The company wishes to achieve a mark-up of 50% on cost.
It is estimated that the lifetime costs of the product will be as follows:
Manufacturing costs – OMR 12.00 per unit
Design and development costs – OMR 120,000
End of life costs – OMR 60,000
You are required to calculate:-
1. The target cost for the product per unit and in total