Answer the following questions using the information below:
After conducting a market research study, El Ain Doors decided to produce a new interior door to complement its exterior door line. It is estimated that the new interior door can be sold at a target price of $120. The annual target sales volume for interior doors is 20,000. El Ain Doors has target operating income of 20% of sales.
-What is the total target cost?
A) $5,658,000
B) $6,900,000
C) $500,000
D) $1,242,000

Question

Quizplus · Accepted Answer

Total target cost = Target sales volume * (Target price - Target operating income)= 20,000 * (120 - 20% of 120)= 20,000 * (120 - 24)= 20,000 * 96= $1,920,000

Answer the Following Questions Using the Information Below