Economy Builders thinks there is a market for a new portable saw. Economy\'s res

Question

Economy Builders thinks there is a market for a new portable saw. Economy's research department has surveyed prices that are currently sold on the market. Economy believes that $80 would be about the right selling price. At this price they believe they can sell 90,000 new saws over the products life cycle. It will cost approximately $1,000,000 to design and develop the saw. Economy has a target profit of 20% of sales.

Determine the per unit target cost to manufacture, sell, distribute, and service the saw.

Explanation / Answer

revenue from selling 90000*80 = 7200000 cost of developing saw = 1000000 profit = 20% let per unit target cost be x 20% = 0.2 = 7200000-(1000000+ 90000x) / (1000000+ 90000x) solve for x that is the answer

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