Flyer company sells a product in a competitive marketplace. market analysis indicates that its product would probably sell at $48 per unit. flyer management desires a 12.5% profit margin on sales. their current full cost for the product is $44 per unit. if the company cannot cut costs any lower than they already are, what would the profit margin on sales be to meet the market selling price? 7.3% 10.3% 8.3% 9.3%

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Jenna Wells

Business

31 December, 00:51

Flyer company sells a product in a competitive marketplace. market analysis indicates that its product would probably sell at $48 per unit. flyer management desires a 12.5% profit margin on sales. their current full cost for the product is $44 per unit. if the company cannot cut costs any lower than they already are, what would the profit margin on sales be to meet the market selling price? 7.3% 10.3% 8.3% 9.3%

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Ward · Answer 1

8.3% Market selling price = $48 per unit Cost price = $44 Profit = 48 - 44 = $4 Profit margin = profit/selling price x 100 4/48 x 100 = 8.333% To obtain a 12.5% profit margin the costs would have to be cut to $42 or the selling price would have to rise to $50.29 Profit margin = profit / selling price = selling price - cost price / selling price 12.5% = 6 / 48 = 48 - 42 / 48 = 0.125 12.5% = 6.29 / 50.29 = 50.29 - 44 / 50.29 = 0.12507