Per-unit variable selling costs are estimated

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Reference no: EM13749994

The marketing department at Cleveland Furniture Mfg. has an idea for a new product that is expected to have a six-year life cycle. After conducting market research, the company found that the product could sell for $800 per unit in the first four years of life and for $650 per unit for the last two years. Unit sales are expected to be as follows:

Year 1 4,000

Year 2 3,600

Year 3 4,700

Year 4 5,000

Year 5 1,500

Year 6 1,000

Per-unit variable selling costs are estimated at $140 throughout the product’s life; total fixed selling and administrative costs over the six years are expected to be $3,700,000. Cleveland Furniture Mfg. desires a profit margin of 15 percent of selling price per unit.

Reference no: EM13749994

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