Aldot Candy Corporation is implementing a target costing approach for its latest new product, the "Big Glob" candy bar.The following information relates to the Big Glob: Based on this information, what is Aldot's target selling price per bar for the Big Glob?
A)$0.48
B)$0.50
C)$0.64
D)$0.70

Question

Aldot Candy Corporation is implementing a target costing approach for its latest new product, the "Big Glob" candy bar.The following information relates to the Big Glob:  Based on this information, what is Aldot's target selling price per bar for the Big Glob?
A)$0.48 
B)$0.50 
C)$0.64 
D)$0.70

Quizplus · Accepted Answer

Target Costing Formula:
Target Cost = Target Selling Price - Target Profit

Target Profit = 20% of Target Selling Price
Target Profit = 0.2 x Target Selling Price

Target Cost = $0.32
Target Selling Price = Target Cost + Target Profit
Target Selling Price = $0.32 + 0.2($0.32)
Target Selling Price = $0.64

Therefore, Aldot's target selling price per bar for the Big Glob is $0.64.

Aldot Candy Corporation Is Implementing a Target Costing Approach for Its