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Airflow Company sells a product in a competitive marketplace. Market analysis indicates that the 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. Airflow anticipates selling 50,000 units. The current full cost per unit for the product is $25.00 per unit.
(a) What is the amount of profit per unit?
(b) What is the target cost per unit if Airflow meets the market dictated price and management's desired profit?
Fixed Assets
Long-term assets purchased for operating the business, not expected to be converted to cash within a year.
Investing Activities
Deals that include buying and selling assets with long-term value and investments outside of cash equivalents.
Operating Activities
Business actions related directly to the production and delivery of goods and services, reflected in the cash flow statement.
Investing Activities
Transactions and events that involve the purchase or sale of long-term assets and investments, a component of a company’s cash flow statement.
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