Question - The market price for low-end laser printers is well established at $400 per unit. ABC Technologies is considering entering this market and has enough available space in their plant to accommodate a new production line. However, several pieces of new manufacturing equipment would be required which are estimated to cost $28,000,000. ABC Technologies requires a minimum ROI of 15% on any product line investment and estimate that they can capture 100,000 units of the low-end laser printer market at the prevailing market price.
Calculate the target cost per unit for ABC Technologies if it is to enter the low-end laser printer market while earning the minimum 15% ROI.