Acme Anvil Company is considering the introduction of a new product to its line of quality anvils. The company's engineering and manufacturing managers have concluded that there are no product design or manufacturing process changes that will allow the new product to be produced at a unit cost of less than $30. If Acme requires a profit of 40%, what price must the new product sell at to justify its introduction?

Question

Quizplus · Accepted Answer

The correct answer is A. The new product must sell for at least $50 to justify its introduction. This is because the unit cost is $30 and Acme requires a profit of 40%. Therefore, the selling price must be at least $30 / (1 - 0.40) = $50.

Acme Anvil Company Is Considering the Introduction of a New