Congratulations! You got the job! Your first project is to work with Maddie to assess the feasibility of the special edition rash-vest line. You have been told that in order to produce the rash-vests, Maddie will need to work with a pattern maker to design the vest. This is estimated to cost $12 000. Maddie has a factory in mind that can manufacture the rash- vests with a set-up cost of $17 000, and a combined material and labour cost of $14 per vest. Transport and distribution costs are estimated to be approximately $2 per unit. Similar vests sell for $60 and Maddie is confident that ASD will be able to sell their rash-vests directly to consumers for the same amount.
a. Advise Maddie how many rash-vests ASD will need to sell in order to break even.
b. List three other factors Maddie should consider when making the decision as to how and whether to develop the special edition rash-vests.