Oregon Equipment Company wants to develop a new log-splitting
machine for rural homeowners. Market research has determined that
the company could sell 5,000 log-splitting machines per year at a
retail price of $600 each. An independent catalog company would
handle sales for an annual fee of $3,000 plus $50 per unit sold.
The cost of the raw materials required to produce the log-splitting
machines amounts to $60 per unit.
If company management desires a return equal to 10 percent of the
final selling price, what is the target conversion and
administrative cost per unit? Round answer to the nearest cent.
$Answer
The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.
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