Question

Cans plc is developing a new form of “crinkly can” for soft drinks. The crinkly can has grooves in the side which match the size of the fingers of a hand. The company’s research and development department employ 50 people full-time and accounts for 2 percent of the company’s costs. The design manager thinks that it may be important in future to develop special designs for particular commercial customers, even if this involves relatively small production runs and a higher price of the customer for each can. He said ‘our profit margins are not yet satisfactory. I would like to maintain our existing level or sales of the standard can at standard price, but also take advantage of our design skills and sells additional cans of the new style cans in smaller batches but at a higher price.’ Explain the further information you would need in order to report on the benefits and problems for creating higher contribution margins and higher profit margins on the basis of the design manager’s proposals.

Answer 1

Answer:

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