Portland Corporation sells a product for $200 per unit. Its market share is 35 percent of the units sold. The marketing manager believes that the market share can be increased to 40 percent of the units sold with a reduction in price to $175. The product is currently earning a profit of $30 per unit. The president of Portland Corporation believes that his company needs to maintain the same profit level per unit. The total market for the product has annual sales of 10,000 units.
Required:
a. How many dollars does Portland Corporation currently sell of the product each year?
b. What is the target price per unit?
c. What is the target cost per unit?

Question

Quizplus · Accepted Answer

The Answer of Portland Corporation sells a product for $200 per unit. Its market share is 35 percent of the units sold. The marketing manager believes that the market share can be increased to 40 percent of the units sold with a reduction in price to $175. The product is currently earning a profit of $30 per unit. The president of Portland Corporation believes that his company needs to maintain the same profit level per unit. The total market for the product has annual sales of 10,000 units.
Required:
a. How many dollars does Portland Corporation currently sell of the product each year?
b. What is the target price per unit?
c. What is the target cost per unit?

Portland Corporation Sells a Product for $200 Per Unit