Answer:
B ($227.27)
Explanation:
Before the competitor arrived
Annual cost = $280 × 100,000 = $28,000,000
Annual sales = $360 × 100,000 = $36,000,000
Annual profit = $36,000,000 - $28,000,000 = $8,000,000
When the competitor arrived
Quantity sold annually increases by 10% = 100,000 + (100,000×0.1) = 100,000 + 10,000 = 110,000
Annual sales = $300 × 110,000 = $33,000,000
Target cost to make a profit of $8,000,000 = ($33,000,000 -$8,000,000)/110,000 = $25,000,000/110,000 = $227.27
