IBurst Technology Is Developing a High-Speed Modem to Connect Notebook

question 78

Essay

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

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Definitions:

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