Question

Question Content Area Flyer Company sells a product in a competitive marketplace. Market analysis indicates that its product would probably sell at $48 per unit. Flyer's management desires a 12.5% profit margin on sales. Its current full cost for the product is $44 per unit. In order to meet the new target cost, how much will Flyer have to cut costs per unit, if any

Answer 1

Flyer would have to cut $2 per unit  in order to meet the new target cost.

What is target cost?

The target cost of a product is the expected selling price of the product minus the desired profit from selling

First, we need to get the target cost

= Target Selling price per unit - Target profit per unit

= $48 - ($48 x 0.125)

= $48 - $6

= $42

Then,  Flyer have to cut costs per unit

= Cost for product - Target cost

= $44 - $42

= $2

Hence, Flyer would have to cut $2 per unit  in order to meet the new target cost.

Learn more about target costs here: brainly.com/question/15237816

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