Calculate the cost per unit looking at the whole life cycle

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Reference no: EM13920568

Solaris specialises in the manufacture of solar panels. It is planning to introduce a new slimline solar panel specially designed for small houses. Development of the new panel is to begin shortly and Solaris is in the process of determining the price of the panel. It expects the new product to have the following costs.

	Year 1	Year 2	Year 3	Year 4
Units manufactured and sold	2,000	15,000	20,000	5,000
	$	$	$	$
R&D costs	1,900,000	100,000	-	-
Marketing costs	100,000	75,000	50,000	10,000
Production cost per unit	500	450	400	450
Customer service costs per unit	50	40	40	40
Disposal of specialist equipment				300,000

The Marketing Director believes that customers will be prepared to pay $500 for a solar panel but the Financial Director believes this will not cover all of the costs throughout the lifecycle.

Required

Calculate the cost per unit looking at the whole life cycle and comment on the suggested price.

Reference no: EM13920568

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