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A programme with high development cost and a small production run will have

  • A.A high amortised cost per aircraft
  • B.A low amortised cost per aircraft
  • C.No amortised development cost
  • D.The same amortised cost as any other programme

Answer: A

Correct answer: A high amortised cost per aircraft

Amortised development cost is the RDT&E divided by the number of aircraft built, so a large numerator over a small denominator gives a high charge per aircraft.

This is the structural difficulty of military and niche programmes: a development effort as demanding as a transport's may be spread over a few dozen airframes rather than a few thousand, so each carries tens of millions in development alone. It is also why export sales matter so much - every additional aircraft dilutes a cost that has already been spent.

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