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.
In order to meet the new target cost, how much will the company have to cut costs per unit, if any?
A) $1
B) $3
C) $2
D) $0

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.
In order to meet the new target cost, how much will the company have to cut costs per unit, if any?
A) $1
B) $3
C) $2
D) $0

Quizplus · Accepted Answer

The Answer of 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.
In order to meet the new target cost, how much will the company have to cut costs per unit, if any?
A) $1
B) $3
C) $2
D) $0

Flyer Company Sells a Product in a Competitive Marketplace