AirTravel Inc. manufactures a wide variety of parts for commercial aircraft, including airplane engines. The component is purchased by OEM (original equipment manufacturers) such as Boeing, for use in the larger and more powerful outboards. The units sell for $10,000, and sales volume averages 2,000 units per year. Recently, AirTravel's major competitor lowered the price of the equivalent part to $9,500. The market was very competitive, and AirTravel realized it had to meet the new price or lose significant market share. The controller assembled the following data for the most recent year: Required:
Calculate the target cost for maintaining current market share and profitability.

Question

AirTravel Inc. manufactures a wide variety of parts for commercial aircraft, including airplane engines. The component is purchased by OEM (original equipment manufacturers) such as Boeing, for use in the larger and more powerful outboards. The units sell for $10,000, and sales volume averages 2,000 units per year. Recently, AirTravel's major competitor lowered the price of the equivalent part to $9,500. The market was very competitive, and AirTravel realized it had to meet the new price or lose significant market share. The controller assembled the following data for the most recent year:  Required:
Calculate the target cost for maintaining current market share and profitability.

Quizplus · Accepted Answer

The Answer of AirTravel Inc. manufactures a wide variety of parts for commercial aircraft, including airplane engines. The component is purchased by OEM (original equipment manufacturers) such as Boeing, for use in the larger and more powerful outboards. The units sell for $10,000, and sales volume averages 2,000 units per year. Recently, AirTravel's major competitor lowered the price of the equivalent part to $9,500. The market was very competitive, and AirTravel realized it had to meet the new price or lose significant market share. The controller assembled the following data for the most recent year:  Required:
Calculate the target cost for maintaining current market share and profitability.