Arnold Company produces handheld calculators, and their manufacturing cost is currently $5.80 per unit. The company also has non-manufacturing costs of $1.20 per unit. Arnold employs target pricing strategy, and the current market price is $8.00 per unit. If Arnold wishes to price their product at a 25% markup over full-product cost, what must they do?
A) Price the product at $8.75 per unit.
B) Reduce full-product cost by $0.20.
C) Reduce full-product cost by $0.60.
D) Reduce the non-manufacturing cost by 25%.

Question

Quizplus · Accepted Answer

C) Calculations:
$8.00 / 125% = $6.40
$6.40 - ($5.80 + $1.20) = ($0.60)

Arnold Company Produces Handheld Calculators, and Their Manufacturing Cost Is