Gibb,Inc.has just designed a new product with a target cost of $54.Gibb requires new products to have a profit of 25%.What is the target price for the new product?
A)$13.50
B)$54.00
C)$64.00
D)$72.00

Question

Quizplus · Accepted Answer

The target price is calculated by adding the desired profit margin to the target cost. Given a profit of 25%, the calculation is $54 * (1 + 0.25) = $54 * 1.25 = $67.50. However, since $67.50 is not an option and there might have been a mistake in the options provided, the closest correct approach based on the given options would be to assume a misunderstanding in the calculation method. The correct calculation method should be to find a price where $54 is 75% (100% - 25% profit margin) of the target price. Thus, $54 / 0.75 = $72. This makes option D the correct choice based on the correct interpretation of how to apply the profit margin to achieve the target price.

Gibb,IncHas Just Designed a New Product with a Target Cost