Dream Company sells a product for $400 per unit. Its market share is 25 percent of the units sold. The marketing manager believes that the market share can be increased to 38 percent of the units sold with a reduction in price to $325. The product is currently earning a profit of $75 per unit. The president of Dream Company believes that his company needs to maintain the same profit level per unit. The total market for the product has annual sales of 6,000 units.
Required:
a. How many units does Dream Company currently sell of the product?
b. What is the target price per unit?
c. What is the target cost per unit?

Question

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The Answer of Dream Company sells a product for $400 per unit. Its market share is 25 percent of the units sold. The marketing manager believes that the market share can be increased to 38 percent of the units sold with a reduction in price to $325. The product is currently earning a profit of $75 per unit. The president of Dream Company believes that his company needs to maintain the same profit level per unit. The total market for the product has annual sales of 6,000 units.
Required:
a. How many units does Dream Company currently sell of the product?
b. What is the target price per unit?
c. What is the target cost per unit?

Dream Company Sells a Product for $400 Per Unit