Answer to Question #211668 in Economics for khilesh

Question

A market survey shows that the best competitor's selling price for a product is determined to be $450 per unit. A company is expecting to sell 1000 units per month from this product at this price with a profit margin of 20%. The product's total manufacturing cost per unit is $400. The engineers decided that the material cost ($95 per unit) is high and should be reduced to meet the market target cost. What should the material cost per unit be so that the total manufacturing cost of this product becomes equal to the target cost?

1.$70

2.$50

3.$30

4.$25

Answer 1

2.$50