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.