Question

Sid's Skins makes a variety of covers for electronic organizers and portable music players. The company's designers have discovered a market for a new clear plastic covering with college logos for a popular music player. Market research indicates that a cover like this would sell well in the market priced at $22.50. Sid's desires an operating profit of 25 percent of costs.What is the highest acceptable manufacturing cost for which Sid’s would be willing to produce the cover?What is the company’s profit for each cover using the highest acceptable manufacturing cost? (Remember: Profit = Selling Price – Cost) Show your mathematical calculations.

Answer 1

4.50$

Explanation:

Given that Sid's Skins makes a variety of covers for electronic organizers and portable music players

Market price indicated by research = 22.50 $

Let cost of Sid = 100

Oper profit =25

So selling price = 125

Hence costs highest for Sid would be

`(100)/(125) (22.50)\\= 18`

Highest manufacturing cost = 18 dollars

Profit per unit =
`22.50-18 =4.50`$