Scribd Logo
Upload

Welcome to Scribd!

  • Calculator

    Uploaded by

    Adeel Rana
    575 views2 pages
    This document provides information to estimate the development costs for a pocket calculator, including an annual production volume of 500,000 units over 4 years with a sales price of $15. The development time was 1 year with an internal team of 4 people and external team of 8 people, and total development costs were $2,080,000. It also includes finance details for the production such as fixed costs of $11,000,000 and variable costs of $80,000 per unit. The break even point is estimated to be 3 years.

    Original Description:

    Exercise 1 new product development

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    This document provides information to estimate the development costs for a pocket calculator, including an annual production volume of 500,000 units over 4 years with a sales price of $15. The development time was 1 year with an internal team of 4 people and external team of 8 people, and total development costs were $2,080,000. It also includes finance details for the production such as fixed costs of $11,000,000 and variable costs of $80,000 per unit. The break even point is estimated to be 3 years.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    575 views2 pages

    Calculator

    Uploaded by

    Adeel Rana
    This document provides information to estimate the development costs for a pocket calculator, including an annual production volume of 500,000 units over 4 years with a sales price of $15. The development time was 1 year with an internal team of 4 people and external team of 8 people, and total development costs were $2,080,000. It also includes finance details for the production such as fixed costs of $11,000,000 and variable costs of $80,000 per unit. The break even point is estimated to be 3 years.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    MUHAMMAD ADEEL RANA

    18-28021

    Estimate what fraction of the price of a pocket calculator is required to cover the cost of
    developing the product. To do this you might start by estimating the information needed to
    fill out Exhibit 1-3 for the pocket calculator.

    Annual production volume = 500,000 units per year

    Sales lifetime = 4 years

    Sales Price = $15

    Number of unique parts = 20

    Development time = 1 year

    Internal development team (peak size) = 4 people

    External development team (peak size) = 8 people

    Development Cost = $2,080,000

    Production investment = $2,080,000

    Finance Details:

    Fixed cost:

    Land 5,000,000

    Building 6,000,000

    Machinery 70,000,00

    Preliminary Expenses 10,000

    Contingency 10,000

    Total $ 2,000,000
    Variable cost:

    Raw material 20,000


    Wages 30,000
    Bills 10,000
    Tax 10,000
    Depreciation 10,000
    Total $80,000

    Break Even Analysis:

    Breaken= Fixed Cost/Selling price*no of units – variable cost

    =2,000,000/15*50,000 – 80,000

    =3 years

    You might also like