Portland Equipment Company wants to develop a new log-splitting machine for rural homeowners. Market research has determined
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Portland Equipment Company wants to develop a new log-splitting machine for rural homeowners.
Market research has determined that the company could sell 6,000 log-splitting machines per year at a retail price of \($850\) each. An independent catalog company would handle sales for an annual fee of
\($6,000\) plus \($59\) per unit sold. The cost of the raw materials required to produce the log-splitting machines amounts to \($95\) per unit.
Required
If company management desires a return equal to 10 percent of the final selling price, what is the target unit cost?
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