Summit has learned that a competitor plans to introduce a similar widget at a price of $80. In response, Summit may reduce its selling price to $80. If Summit requires a 25% return on sales, what is the target cost for the new widget?
A) $80.
B) $60.
C) $23.75.
D) $20.

Question

Quizplus · Accepted Answer

To achieve a 25% return on sales with a selling price of $80, Summit's target cost must be 75% of the selling price. Therefore, the target cost is 75% of $80, which is $60.

Summit Has Learned That a Competitor Plans to Introduce a Similar