Question

Mesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its catalog, which it issues monthly. Given market research, Mesa believes that it can charge $20 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $22. By using cheaper materials and gaining efficiencies in mass production, Mesa believes it can reduce Slim Slicer's cost substantially. Mesa wishes to earn a return of 40% of the selling price. (a) Compute the target cost for the Slim Slicer. (Round answer to 2 decimal places, e.g. 10.50.)

Answer 1

Answer:

Target Cost $12

Explanation:

Target Sales Price                       20

Gross Mark up 20 * 40%              (-8)

Target Cost                              $12

To calculate the target cost is necessary to rest the gross mark up to the target sales price.