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balu736 [363]
3 years ago
14

Pizza Pies Limited has the following value chain for its pizzas. Boxes are designed by Shala Designers Inc. and printed and deli

vered by Rodoes Printing Co. for $0.95 per box. The pizzas are made in the stores with fresh ingredients and baked in the ovens for a total cost of $3.80, including labor, ingredients, and overhead. The pizza delivery costs $1.35. Pizza Pies needs to reduce the price of its pizza to $6.50 to meet local demand. However, it desires a 10 percent markup for profit. a-1. What is the target cost?
Business
1 answer:
Ierofanga [76]3 years ago
7 0

Answer:

Target cost= $5.91

Explanation:

Giving the following information:

Pizza Pies needs to reduce the price of its pizza to $6.50 to meet local demand. However, it desires a 10 percent markup for profit.

<u>We need to find the target cost using the following formula:</u>

Target cost= selling price /  (1 + mark up percentage)

Target cost= 6.5/ (1.1)

Target cost= $5.91

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