Trans Plc Estimates That A New Product Will Sell In Sufficient Quantities To Jus (1)

Trans PLC estimates that a new product will sell in sufficient quantities to justify its manufacture at a selling price of 175. The company needs to invest 5 million to produce a quantity of 10,000 of these new products per year and requires a return on that investment of 12% per annum. The current prediction is that the product will cost 140 to manufacture. To achieve the target selling price and target rate of return, the product needs to be re-engineered to reduce its cost of manufacture by:

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