A company believes it can sell 2,000,000 units of its proposed new bottle stopper at a price of $16.00 each.If the company desires to make a profit of $3,000,000 on the bottle stopper, what is the target cost for each bottle stopper?

Question

Quizplus · Accepted Answer

The target cost per bottle stopper is calculated by subtracting the desired profit from the total revenue and then dividing by the number of units. Total revenue is 2,000,000 units * $16 = $32,000,000. Desired profit is $3,000,000. Therefore, target cost = ($32,000,000 - $3,000,000) / 2,000,000 units = $14.50.

A Company Believes It Can Sell 2,000,000 Units of Its