Mai Co currently sells 25 styles of sports watches. The market has remained static with an overall revenue of $50 million.

Mai Co is always trying to bring out new designs and colours to try and increase market share or at least maintain it. In order to not fall behind their competitors, Mai Co tries to bring new products to the market quickly. Therefore Mai Co undertakes market research one year, and the results of that market research are incorporated in the new styles/colours that are launched the next year.

Historically, Mai Co have measured their performance by looking for an increase in the revenue and net profit figures and ensuring that there is cash in the bank. A new financial manager has been appointed who is keen to increase the range of performance measures used by Mai Co.

The following data is available:

                                                       Year ended 31 October 20X3                Year ended 31 October 20X4

Revenue                                                       $5.75 million                                       $ 6 million

Number of styles                                           22                                                       25

Net profit                                                       $345,000                                            $348,000

Mark research costs                                     $200,000                                            $150,000