# Target profit margin

Registered Posts: 452
Another one

how do i work out part B please i can not figure it out for some reason and have a sneaky suspicion it is staring me right in the face

thank you

• Registered, Moderator Posts: 2,034 mod
The expression read the full question is applicable.
Now that you know that the product is viable at a price of £40 provided that fixed production costs are no more than £8,000,000 for the 500,000 units they expect to sell you can compare that target cost with the £8,500,000 expected cost for that level of production. They need £8 million or less, the engineers say it will cost £8.5 million. So £40 gets a NO.

You also know that at a price of £50 the target fixed production cost is £9,460,000 but the engineers say it will cost £8,500,000.
It is just like going to the checkout in a supermarket prepared to pay up to £9,460 and being told you only have to pay £8,500. So £50 gets a YES

Does that make sense?
Sandy
sandy@sandyhood.com
www.sandyhood.com
• Registered Posts: 452
SandyHood wrote: »
The expression read the full question is applicable.
Now that you know that the product is viable at a price of £40 provided that fixed production costs are no more than £8,000,000 for the 500,000 units they expect to sell you can compare that target cost with the £8,500,000 expected cost for that level of production. They need £8 million or less, the engineers say it will cost £8.5 million. So £40 gets a NO.

You also know that at a price of £50 the target fixed production cost is £9,460,000 but the engineers say it will cost £8,500,000.
It is just like going to the checkout in a supermarket prepared to pay up to £9,460 and being told you only have to pay £8,500. So £50 gets a YES

Does that make sense?

Hi Sandy,

Thank you very much for this so late on a Sunday night to much appreciated :thumbup1: , not sure why i did not get it first time makes perfect sense the way you have explained it