Wenner Corporation would like to use target costing for a new product it is considering introducing. At a selling price of $44 per unit, management projects sales of 10,000 units. The new product would require an investment of $900,000. The desired return on investment is 10%.
-The target cost per lawn blower is closest to:
A) $24.00
B) $23.20
C) $26.88
D) $25.98

Question

Quizplus · Accepted Answer

Target cost = Anticipated selling price - Desired profit
= $24.00 per unit - ($24,000 ÷ 30,000 units)
= $24.00 per unit - $0.80 per unit = $23.20 per unit

Wenner Corporation Would Like to Use Target Costing for a New