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Productivity Software Inc. (PSI) designs and produces software that enhances team productivity.
Productivity Software Inc. (PSI) designs and produces software that enhances team productivity. The average sales life expectancy of its products is two years with the peak sales between the second and the eighth month after the introduction. Because of the limited life of its products, PSI's strategy has been to concentrate on the development of new products and not on installation and long-term usage problems. Once a new product is on the market, software engineers move on to the next new product. Marketing is responsible for all customer services after sales.The average selling price per unit is $75,000. On average the design engineers spend 50,000 hours to complete a new product at an average cost of $150 per hour. Once the engineers complete their work, PSI spends $200 per unit to manufacture the product. The firm's target is to sell 600 units during the two years sales life expectancy.PSI is in the process of reviewing its strategy and has gathered the following data on their newest software product:Additional engineering desing work required to facilitate trouble-free installation by customers; 7,000 hours @ $80
