making sell or process further decision

timer Asked: Aug 21st, 2015

Question description

Davis Consulting provides consulting services at an average price of $175 per hour and incurs varible costs of $100 per hour. Assume aberage fixed costs are $5,250 a month. Davis has developed new software that will revolutionize billing for companies. Davis has already invested $200,000 in the software. It can market the software as is at $30,000 per client and expects to sell to eight clients. Davis can develop the software further, adding integration to Microsoft products at an additional development cost of $120,000. The additional development will allow Davis to sell the software for $38,000 each, but to 20 clients. Should Davis sell the software as is or develop it further?

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