Airflow Company Sells a Product in a Competitive Marketplace

question 82

Essay

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 per unit.
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(a)What is the amount of profit per unit?
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(b)What is the target cost per unit if Airflow meets the market dictated price and management's desired profit?

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Definitions:

Vision and Mission

Fundamental organizational statements where the vision articulates the desired future state and the mission describes the organization's purpose.

Succession Problem

The challenge an organization faces in identifying and preparing new leaders to replace those who are leaving.

Equally Capable

Being as competent or skilled in particular tasks or fields as others.

General Managers

Managers who are responsible for complex, multifunctional units.