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See the opentuition course notes chapter 3 example 1, the part c of the question I am not understanding the logic of the answer???
PLEASE REPLY, Thanks in advanceWe are thinking of paying more for design and development, and so that on its own would make the cost per unit more expensive.
However, we are doing it to try and reduce the manufacturing cost per unit.
We need to get the total cost per unit down to the target cost (of $7). We can do this if we reduce the production cost per unit, but to do this will cost us more design money – so we need to reduce the production cost even more (down to $4.80 – see the answer for the workings).
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