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Chelsea Toy Manufacturing has recently performed an activity-based costing analysis of one of its best-selling toys, the Main Man Robot. The analysis shows the following estimated monthly cost per 1,000 unit production run:

-To achieve a required return of 30% of monthly revenues, the percent cost reduction target is:
A) 36%
B) 13.3%
C) 16%
D) 2%

Question

Use the following to Ans questions :
Chelsea Toy Manufacturing has recently performed an activity-based costing analysis of one of its best-selling toys, the Main Man Robot. The analysis shows the following estimated monthly cost per 1,000 unit production run:
 
-To achieve a required return of 30% of monthly revenues, the percent cost reduction target is:
A) 36% 
B) 13.3% 
C) 16% 
D) 2%

Quizplus · Accepted Answer

To achieve a 30% return on revenues, costs must be reduced by 16% to increase the profit margin to the desired level.

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