Orwell is about to introduce a new product and has established a target cost of $144 and a target margin on sales of 40 per cent. What is the target price?
A) $200
B) $225
C) $240
D) $280

Question

Quizplus · Accepted Answer

To calculate the target price, we need to use the formula:

Target price = Target cost / (1 - Target margin)

Substituting the given values, we get:

Target price = $144 / (1 - 0.4)

Target price = $144 / 0.6

Target price = $240

Therefore, the target price for Orwell's new product is $240. The correct choice is C.

Orwell Is About to Introduce a New Product and Has