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. Flyer's current full cost for the product is $44 per unit.
-The desired profit per unit is
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. Flyer's current full cost for the product is $44 per unit.​
-The desired profit per unit is
A)$6
B)$8
C)$5
D)$4

Quizplus · Accepted Answer

The desired profit per unit is $6. The profit margin is 12.5%, so the desired profit is 12.5% of $48, which is $6.

Flyer Company Sells a Product in a Competitive Marketplace