Flyer Company sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $48 per unit. Flyer management desires a 12.5% profit margin on sales. Their current full cost for the product is $44 per unit.
What is the desired profit per unit?
A) $6
B) $8
C) $5
D) $4

Question

Flyer Company sells a product in a competitive marketplace.  Market analysis indicates that its product would probably sell at $48 per unit.  Flyer management desires a 12.5% profit margin on sales.  Their current full cost for the product is $44 per unit.
What is the desired profit per unit?
A) $6
B) $8
C) $5
D) $4

Quizplus · Accepted Answer

The desired profit per unit is 12.5% of the selling price, which is $48 per unit. Therefore, the desired profit per unit is $48 x 0.125 = $6.

Flyer Company Sells a Product in a Competitive Marketplace