Wasson Widget Company Is Contemplating the Production and Sale of a New

question 93

Multiple Choice

Wasson Widget Company is contemplating the production and sale of a new widget. Projected sales are $300,000 (or 75,000 units) and desired profit is $36,000. What is the target cost per unit?

• A) $4.00
• B) $3.52
• C) $4.48
• D) $4.80

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Definitions:

Substitute

A product or service that can be used in place of another to satisfy similar needs or demands.

Industry Entry

The process of a new competitor or business entering into a market or industry.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices at a given time.

Long Run

That period of time for which there are no fixed factors of production: Firms can increase or decrease the scale of operation, and new firms can enter and/or existing firms can exit the industry.