Galla Inc. operates in a highly competitive market where the market price for its product is $170 per unit. Galla desires a $15 profit per unit. Galla expects to sell 5,000 units. Additional information is as follows: Using target costing, what is the target cost?
A) $135.00
B) $160.00
C) $130.00
D) $145.00
E) $155.00

Question

Galla Inc. operates in a highly competitive market where the market price for its product is $170 per unit. Galla desires a $15 profit per unit. Galla expects to sell 5,000 units. Additional information is as follows:  Using target costing, what is the target cost?
A) $135.00 
B) $160.00 
C) $130.00 
D) $145.00 
E) $155.00

Quizplus · Accepted Answer

Target cost = Expected selling price − desired profit
$170 − $15 = $155

Galla Inc Operates in a Highly Competitive Market Where the Market