Company B is about to being developing a new product for launch in its existing market. They have forecast sales of 20,000 units and the marketing department suggest a selling price of $43/unit. The company seeks to make a mark-up of 40% product cost. It is estimated that the lifetime costs of the product will be as follows:
(1) Design and development costs $43,000.
(2) Manufacturing costs $15/unit.
(3) Plant decommissioning costs $30,000.
The company estimates that if it were to spend an additional $15,000 on design, manufacturing costs/unit could be reduced.
What is the life cycle cost?