Wurster Company sells a product for £400 per unit. Its market share is 20 percent of the units sold. The marketing manager believes that the market share can be increased to 28 percent of the units sold with a reduction in price to £360. The product is currently earning a profit of £62 per unit. The president of Wurster Company believes that his company needs to maintain the same profit level per unit. The total market for the product has annual sales of 5,000 units.
Required:
a.
How many units does Wurster Company currently sell of the product?
b.
What is the target price per unit?
c.
What is the target cost per unit?

Question

Quizplus · Accepted Answer

The Answer of Wurster Company sells a product for £400 per unit. Its market share is 20 percent of the units sold. The marketing manager believes that the market share can be increased to 28 percent of the units sold with a reduction in price to £360. The product is currently earning a profit of £62 per unit. The president of Wurster Company believes that his company needs to maintain the same profit level per unit. The total market for the product has annual sales of 5,000 units.
Required:
a.
How many units does Wurster Company currently sell of the product?
b.
What is the target price per unit?
c.
What is the target cost per unit?

Wurster Company Sells a Product for £400 Per Unit