Blumstein Corporation would like to use target costing for a new product it is considering introducing. At a selling price of $22 per unit, management projects sales of 60,000 units. The new product would require an investment of $300,000. The desired return on investment is 11%.
-The target cost per unit is closest to:
A)$22.00
B)$23.81
C)$21.45
D)$24.42

Question

Quizplus · Accepted Answer

Target cost = Anticipated selling price - Desired profit
= $22.00 per unit - ($33,000/60,000 units)
= $22.00 per unit - $0.55 per unit = $21.45 per unit

Blumstein Corporation Would Like to Use Target Costing for a New