Boomer Boombox Inc. wants to produce and sell a new lightweight radio. Desired profit per unit is $1.84. The expected unit sales price is $22 based on 10,000 units. What is the total target cost?
A) $201,600
B) $220,000
C) $18,400
D) $238,400

Question

Quizplus · Accepted Answer

The total target cost is calculated by subtracting the total desired profit from the total sales revenue. The total sales revenue is $22 per unit times 10,000 units, which equals $220,000. The total desired profit is $1.84 per unit times 10,000 units, which equals $18,400. Therefore, the total target cost is $220,000 - $18,400 = $201,600.