Question

Micro-Data Systems is trying to decide whether or not to produce and sell a new product it developed. The product engineer argued that "it would be a waste of the $5 million used in development to not produce and sell the product." Do you agree or disagree with the above statement? Briefly explain your reasoning.

Answer 1

The company's growth can be insured through new product development as the existing one might go down after several years. If the company has incurred cost id development phase then it should go through the selling of the product. Anyways, if the comany does not sell it will incur a loss of $5 million. So. it is better to incur that cost and try to sell the product. Because it may give a huge profit and the scenario can change. So, developing a product and not going for prodiction and selling will surely incur a loss of development costs.