Question

Brief exercise 8-1 ortega company manufactures computer hard drives. the market for hard drives is very competitive. the current market price for a computer hard drive is $45. ortega would like a profit of $10 per drive. what target cost ortega should set to accomplish this objective?

Answer 1

The profit that is gained by the company for selling a unit is equal to the difference between the revenue and total cost. In this item the revenue is given to be $45 and the profit is $10. To answer this item, we let x be the cost such that,

                   45 - c = 10

Simplifying,

                      c = 45 - 10

Further simplification will lead us to,

                      c = 35

Answer: $35.