Sportstuff, Inc. is investigating the feasibility of adding a new skateboard to its line-up of products. The marketing department believes that 10,000 units can be sold at $90 each. Sportstuff requires a 25% profit margin (i.e. cost is 75% of selling price) on all products.
To achieve its goal, Sportstuff must earn revenues on the product of:

Question

Quizplus · Accepted Answer

To achieve a 25% profit margin, the selling price must cover both the cost (75%) and the profit (25%). Therefore, the revenue needed is calculated as 10,000 units * $90/unit = $900,000.