The management of Rademacher Corporation is considering introducing a new product--a compact lawn blower. At a selling price of $37 per unit, management projects sales of 47,000 units. The lawn blower would require an investment of $500,000. The desired return on investment is 17%.The desired profit according to the target costing calculations is:
A) $295,630
B) $85,000
C) $1,654,000
D) $1,739,000

Question

Quizplus · Accepted Answer

The desired profit is calculated by first determining the total desired return from the investment, which is $500,000 * 17% = $85,000. This is the amount of profit Rademacher Corporation aims to achieve from introducing the new product, based on their desired return on investment.

The Management of Rademacher Corporation Is Considering Introducing a New