Chris Company Sells a Product for £225 Per Unit

question 39

Multiple Choice

Chris Company sells a product for £225 per unit. Its market share is 20 percent. The marketing manager feels that the market share can be increased to 30 percent with a reduction in price to £195. The product is currently earning a profit of £36 per unit. The president of Chris Company feels that the £36 profit per unit must be maintained. What is the target cost per unit?

• A) £225
• B) £195
• C) £189
• D) £159

---

Definitions:

Project Life

The duration from the initiation to the completion of a project, encompassing all stages of its development and execution.

Salvage Value

Salvage value is the estimated resale value of an asset at the end of its useful life.

Payback Period

This is the duration required to recoup the funds expended in an investment.

Simple Rate Of Return

The rate of return computed by dividing a project’s annual incremental net operating income by the initial investment required.