Integral Data Dynamics Ltd manufactures components for personal computers. It is planning to develop a new Blu-ray burner, BRII, to improve the quality of data retrieval. On the basis of its current product range, the company expects BRII to have prime costs (that is, direct material and direct labour) of $225 and applied manufacturing overhead costs of $150. The marketing manager estimates that BRII will sell for around $600, with sales of around 10 000 units per year for three years, but will then become technologically obsolete.

Required:

1. Should Integral Data Dynamics introduce BRII?

2. What costs, other than the manufacturing costs, should be considered in assessing the profitability of BRII? How high would these costs need to go to deter the company from introducing BRII?