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breakeven time for new product development refer to exhibit 8 14 regarding greyson t 666775

Breakeven time for new product development Refer to Exhibit 8 14 regarding Greyson Technology’s launch of a new digital communications device. Suppose that Greyson reduced the quarterly spending on product development in panel A, which delayed launching the new product for two quarters, at which time the selling price and sales volume would be lower. Specifically, assume the following:

 

Y1,Q1

Y1,Q2

Y1,Q3

Y1,Q4

Y2,Q1

Y2,Q2

Y2,Q3

Y2,Q4

Y3,Q1

Market research (000)

($100)

($50)

             

Product

development (000)

 

($80)

($150)

($150)

($150)

($150)

($150)

($150)

($60)

 

 

Y3,Q1

Y3,Q2

Y3,Q3

Y3,Q4

Y4,Q1

Y4,Q2

Y4,Q3

Y4,Q4

Selling price

$18

$17

$17

$16

$15

$15

$15

$15

Sales quantity (000)

20

30

40

45

45

35

30

20

After Y4, Q4, the competitive price is expected to remain at $15 and the maximum sales will be 20,000 units.

Required

Assuming that the cost per unit remains $10 and the MSDA expenses remain $120,000 per quarter, determine the breakeven time metric under the new assumptions.

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