Reference no: EM132575012

Cans plc is developing a new form of 'crinkly can' for soft drinks. The crinkly can has grooves in the side which match the size of the fingers of a hand. The company's research and development department employs 50 people full-time and accounts for 2 per cent of the company's costs. The design manager thinks that it may be impotent in future to develop special designs for particular commercial customers, even if this involves relatively small production runs and a higher price to the customer for each can. He said ' Our profit margins are not yet satisfactory. You would like to maintain our existing level of sales of the standard can at the standard price, but also take advantage of our design skills and sell additional cans of the new style cans in smaller batches but at a higher price.

Question 1: Explain the further information you would need in order to report on the benefits and problems fo creating higher contribution margins and higher profit margins on the basis of the design manager's proposals