Data Storage Solutions Ltd $($DSS$)$ manufactures components for laptop computers. It is

planning to develop a new solid$-$state drive, the InstaMem, which will offer improved speed

and performance. On the basis of its current product range, the company expects the

InstaMem to have prime costs of $$112\mathrm{.}50$ per unit and applied manufacturing overhead costs

of $$75$ per unit. The marketing manager estimates that the InstaMem will sell for around

$$300,$ with sales of around $10000$ units per year for three years, but will then become

technologically obsolete.

Required:

$1.$ Should DSS introduce the InstaMem?

$2.$ What costs, other than the manufacturing costs, should be considered in assessing the

profitability of InstaMem? How high would these costs need to go to deter the company from

introducing the InstaMem?