(Appendix 12A)iBurst Technology is developing a high-speed modem to connect notebook computers with iSun's satellite-based data network.The cross-functional team in charge of the project has assembled the following information:

$\begin{array}{ l r l }
\text { Expected market price } & \$ 150 \
\text { Required return on sales } & 20 \% \
\text { Product life } & 3 \text { years } \
\text { Currently feasible cost } & \$ 50,000,000 \
\text { Expeoted average annual sales } & 100,000
\end{array}$

Required:

a) Given the above information calculate the cost reduction target.
b) If the cross-functional team believes the cost of the modem cannot be reduced by any more than 18%, is this a feasible product for iBurst Technology? Why or why not?
c) Whether the cost reduction target is feasible or not, what can the cross-functional team do to further reduce cost?

Question

(Appendix 12A)iBurst Technology is developing a high-speed modem to connect notebook computers with iSun's satellite-based data network.The cross-functional team in charge of the project has assembled the following information:

$\begin{array}{ l r l } 
\text { Expected market price } & \$ 150 \
\text { Required return on sales } & 20 \% \
\text { Product life } & 3 \text { years } \
\text { Currently feasible cost } & \$ 50,000,000 \
\text { Expeoted average annual sales } & 100,000
\end{array}$

Required:

a) Given the above information calculate the cost reduction target.
b) If the cross-functional team believes the cost of the modem cannot be reduced by any more than 18%, is this a feasible product for iBurst Technology? Why or why not?
c) Whether the cost reduction target is feasible or not, what can the cross-functional team do to further reduce cost?

Quizplus · Accepted Answer

The Answer of (Appendix 12A)iBurst Technology is developing a high-speed modem to connect notebook computers with iSun's satellite-based data network.The cross-functional team in charge of the project has assembled the following information:

$\begin{array}{ l r l } 
\text { Expected market price } & \$ 150 \
\text { Required return on sales } & 20 \% \
\text { Product life } & 3 \text { years } \
\text { Currently feasible cost } & \$ 50,000,000 \
\text { Expeoted average annual sales } & 100,000
\end{array}$

Required:

a) Given the above information calculate the cost reduction target.
b) If the cross-functional team believes the cost of the modem cannot be reduced by any more than 18%, is this a feasible product for iBurst Technology? Why or why not?
c) Whether the cost reduction target is feasible or not, what can the cross-functional team do to further reduce cost?

(Appendix 12A)iBurst Technology Is Developing a High-Speed Modem to Connect