Essay
Airflow Company sells a product in a competitive marketplace. Market analysis indicates that their product would probably sell at $28.00 per unit. Airflow management desires a profit equal to a 20% rate of return on invested assets of $1,400,000. They anticipate selling 50,000 units. Their current full cost per unit for the product is $25 per unit.
(1) What is the amount of profit per unit?
(2) What is the target cost per unit if they meet the market dictated price and management's desired profit?
Correct Answer:
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(1) $28.00 - $25.00 = $3.00
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(2...
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