Flyer Company Sells a Product in a Competitive Marketplace

question 19

Multiple Choice

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.
What is the desired profit per unit?

• A) $6
• B) $8
• C) $5
• D) $4

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Definitions:

Useful Life

The estimated period over which a tangible asset is expected to be usable by the entity, affecting its amortization or depreciation rate.

Tax Rate

The rate at which taxes are levied on a person or a business entity.

Depreciable Non-Current Asset

A long-term asset subject to depreciation, reflecting its wear and tear, obsolescence, or reduction in useful life over time.

Useful Life

The estimated period over which an asset is expected to be used before it is fully depreciated and considered no longer useful for business operations.