Dot Company sells a product for $225 per unit. Its market share is 20 percent. The marketing manager feels that the market share can be increased to 30 percent with a reduction in price to $195. The product is currently earning a profit of $36 per unit. The president of Dot Company feels that the $36 profit per unit must be maintained. What is the target cost per unit?

Question

Quizplus · Accepted Answer

To maintain the $36 profit per unit at the new price of $195, the target cost per unit must be $195 - $36 = $159.

Dot Company Sells a Product for $225 Per Unit