Airflow Company sells a product in a competitive marketplace. Market analysis in

Question

Airflow Company sells a product in a competitive marketplace. Market analysis indicates that their product would probably sell at $28.00 per unit. Airflow management desires a profit equal to a 20% rate of return on invested assets of $1,400,000. They anticipate selling 50,000 units. Their current full cost per unit for the product is $25 per unit.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

(1) What is the amount of profit per unit?

(2) What is the target cost per unit if they meet the market dictated price and management

Explanation / Answer

2) the target cost per unit is$22.40

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