Question
In: Accounting
Maize Water is considering introducing a water filtration device for its 20-ounce water bottles
Maize Water is considering introducing a water filtration device for its 20-ounce water bottles. Market research indicates that 1,000,000 units can be sold if the price is no more than $3. If Maize Water decides to produce the filters, it will need to invest $2,000,000 in new production equipment. Maize Water requires a minimum rate of return of 15% on all investments. Determine the target cost per unit for the filter. (Round answer to 2 decimal places, e.g. 10.50.)
Target cost per unit = $_______
Solutions
Expert Solution
Calculate target cost per unit
target cost per unit = Target price-Desired profit per unit
= 3-(2000000*15%/1000000)
Target cost per unit = 2.70 per unit
ekkarill92 answered 2 years agoRelated Solutions
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