Xavier Company sells a product in a competitive marketplace. Market analysis indicates that their product would probably sell at $50 per unit. Xavier Company management desires a 18% profit margin on sales. Their current full cost per unit for the product is $44 per unit.
a. What is the desired profit per unit for Agway Company?
b. What is the expected selling price for Agway Company using a target costing approach?
c. What is the target cost per unit for Agway Company?

Question

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The Answer of Xavier Company sells a product in a competitive marketplace. Market analysis indicates that their product would probably sell at $50 per unit. Xavier Company management desires a 18% profit margin on sales. Their current full cost per unit for the product is $44 per unit.
a. What is the desired profit per unit for Agway Company?
b. What is the expected selling price for Agway Company using a target costing approach?
c. What is the target cost per unit for Agway Company?

Xavier Company Sells a Product in a Competitive Marketplace