Question: I need a little help please! Teletronics is going to introduce a combination phone/tablet product. Design and testing will take 8 months. Teletronics expects to

I need a little help please!

Teletronics is going to introduce a combination phone/tablet product. Design and testing will take 8 months. Teletronics expects to sell 24,000 units during the first 6 months of sales. Sales over the next 12 months are expected to be less robust at 20,000. And, sales in the final 6 months of the expected life cycle are expected to be 9,000. Teletronics is budgeting for this product as follows:

Begin by preparing the life cycle income statement in order to determine how much operating income the company will make over the product's life cycle.

1.

If Teletronics prices the phone/tablets at $280 each, how much operating

Income will the company make over the product's life cycle? What is the operating income per unit?

2.

Excluding the initial product design costs, what is the operating income in each of the three sales phases of the product's life cycle, assuming the price stays at

$280?

3.

How would you explain the change in budgeted operating income over the product's life cycle? What other factors does the company need to consider before developing the new combination phone/tablet product?

4.

Teletronics is concerned about the number of units it expects to sell in the first sales phase. The company is considering pricing the phone/tablet at $220

for the first 6 months and then increasing the price to $280 thereafter. With this Pricing strategy, Teletronics expects to sell 27,000 units instead of the originally forecast 24,000 units in the first sales phase, and the same number of units for the remaining life cycle. Assuming the same cost structure as given in the problem, which pricing strategy would you recommend? Explain.

I need a little help please! Teletronics is going to introduce a

Data Table

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 Accounting Questions!