Question

Bond co. is using the target cost approach on a new product. information gathered so far reveals: expected annual sales 400,000 units desired profit per unit $0.35 target cost $168,000 what is the target selling price per unit?

Answer 1

The target selling price per unit is $0.77, According the accounting books I have search,using this solution: ($168,000 divided by 400,000) + $0.35= $0.77.Target costing is an approach in most company to know a product’s life cycle cost in which it is sufficient to develop specified functionality and quality.