Question: Could you help me solve this question with 1hours? Epson Electronics Sdn Bhd produces earphones for electronic devices such as laptops and handphones. It is

Could you help me solve this question with 1hours?

Could you help me solve this question with 1hours? Epson Electronics SdnBhd produces earphones for electronic devices such as laptops and handphones. It

Epson Electronics Sdn Bhd produces earphones for electronic devices such as laptops and handphones. It is an electrical device worn on the ear to receive radio or telephone communications or to listen to music on these devices. Due to the rapid rate of technological innovations in this market segment, most of the company's product have short-life cycles. The Marketing Manager believes new product introductions are the key to the company's success. However, the Managing Director is concerned that frequent changes in product line is eroding the company's protability. He believes that many of the new products have such short life cycles that they do not lliy recover the cost. He has asked the management accountant to review the protability of one of its products, E101, which has been phased out after only 3 years in the market. The data for E10] on the sales and manufacturing cost for the past 3 years is as follows: .rice per unit Unit Sales per year: Year 1 Year 3 3,500 Unit Manufacturin_ cost: Direct Material Direct Labor Applied Manufacturing overhead RM 2.25 | In addition to these manufacturing costs, the management accountant was able to extract the following costs associated with E101: Year 0 Year 1 Year 2 Year 3 RM RM RM RM Research & Development cost 19,000 Product Design 12,000 Process Design 17,000 10,000 8,000 Tooling cost 22,000 Marketing Cost 11,000 12,000 6,000 8,000 Warranty claims 10.000 4.000 1.000 After-sales services 3,000 5,500 2,000 Required: a) Assess the profitability of product E101 by computing the gross margin for Year 1, 2 & 3. Was product E101 profitable? (4.5 marks) b) Assess the profitability of E101 based on its entire life cycle cost. Was product E101 profitable? (9.5 marks) c) If the company's policy required a target profit margin on sales for all new products of at least 30% of sales, calculate the target cost of E101. (3 marks) d) What is the average unit cost of E101 over its entire life cycle? Based on this, do you think the management of Epson Electronics Son Bhd would have developed product E101? (4 marks) e) Would you recommend Epson Electronics Sdn Bhd to use life cycle costing (budgeting) to evaluate new product introduction in the future? Explain you answer. (4 marks)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!