Sportstuff, Inc. is investigating the feasibility of adding a new skateboard to its line-up of products. The marketing department believes that 10,000 units can be sold at $90 each. Sportstuff requires a 25% profit margin (i.e. cost is 75% of selling price) on all products.
To achieve its goal, Sportstuff must keep per-unit costs equal to or less than:

Question

Quizplus · Accepted Answer

To maintain a 25% profit margin, the cost of producing the skateboard must be no more than 75% of the selling price. Therefore:
75% of $90 is $67.50
So, per-unit costs must be equal to or less than $67.50 for Sportstuff to achieve its goal. The correct answer is B.