Teller Company has designed a caller ID machine with a large screen that can be seen easily from across the room. The Sales Department believes that this product can be sold for $30 each. Teller requires that all new products yield 15% profit. What is the target cost of the new product?
A) $26
B) $4.50
C) $30
D) $25.50
E) $28.50

Question

Quizplus · Accepted Answer

The target cost can be calculated using the formula:

Target Cost = Selling Price - Desired Profit

We are given that the selling price is $30, and the desired profit is 15% of the selling price, which is:

Desired Profit = 0.15 x $30 = $4.50

Therefore, the target cost is:

Target Cost = $30 - $4.50 = $25.50

So, the best choice is D.

Teller Company Has Designed a Caller ID Machine with a Large