This problem continues the Davis Consulting, Inc. situation from Problem P24-37 of Chapter 24. Davis Consulting provides consulting services at an average price of $175 per hour and incurs variable costs of $100 per hour. Assume average 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?