?A company has developed a new product and has estimated the costs as follows.
?? Direct materials: 50kg required at a cost of $2.50 per kg
?? Direct labour: 25% chance that each unit will take 1.5 hours, 30% chance that each unit will?take 2 hours and 45% chance that each unit will take 2.5 hours
?? Labour is paid at a rate of $15 per hour.
?? Variable overheads will be incurred at a rate of $8 per labour hour
?? The company believes it will be able to sell the product at $200 per unit and it requires a?profit margin of 25%.?
What is the value of the cost gap for this product??