Question

Sheffield Corp. wants to produce and sell a new lightweight radio. Desired profit per unit is $2.50. The expected unit sales price is $20 based on 12000 units. What is the total target cost?

Answer 1

Answer:

$210,000

Explanation:

The computation of the target cost is shown below:

= Expected units × (Selling price per unit - desired profit per unit)

where,

Expected unit is 12,000 units

Selling price per unit is $20

And, the desired profit per unit is $2.5

Now placing these values to the above formula

So, the total target cost is

= 12,000 units × ($20 - $2.5)

= 12,000 units × $17.5

= $210,000

We simply applied the above formula