Reference no: EM132828464

Sue Company is considering the production of a new product. Sue Company has the following data available:

Expected product life 4 years

Expected sales (units) over product life. 2,000

Variable production costs $42 per unit

Variable selling costs $16 per unit

Annual fixed production costs $15,000

Annual fixed selling costs $5,000

Research and development costs $184,000

Selling price $200 per unit

Problem 1: What is the expected profit or (loss) of the product over the product life cycle?

Option 1: $20,000

Option 2: $40,000

Option 3: $204,000

Option 4: $880,000