Rachel Rowe feels that there is a market niche for software that helps entrepreneurs file for a patent. Surveying the features and prices of legal forms already in the market, Rachel believes that a price of $200 would be about right for such software. At that price, she estimates that 2,000 copies could be sold each year. To design, develop, produce and service this software, an investment in assets of $800,000 would be required. Rachel desires a 20% return on her investment, or return on assets (ROA). Given these data, the target cost per unit to create, sell, and service the software should be:

1. $80
2. $120
3. $200
4. $40

Acme, Inc. competes in Segment 4 of the industry value chain. Acme's financial data compared to Segment 4 is as follows:

(millions) Acme, Inc. Segment 4

Revenue $300 $12,000

Gross Profit 100 3,600

Net Income 15 360

Total Assets 150 4,000

Acme management should focus on:

1. Group of answer choices
2. Improving Gross Margins
3. Improving Net Margins
4. Improving Asset Turns
5. Improving Return on Assets