Question

Jarlsberg Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its catalog, which it issues monthly. Given market research, Jarlsberg believes that it can charge $21.00 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $28. By using cheaper materials and gaining efficiencies in mass production, Jarlsberg believes it can reduce Slim Slicer's cost substantially. Jarlsberg wishes to earn a return of 32% of the selling price. Compute the target cost for the Slim Slicer

Answer 1

To calculate the target cost for the Slim Slicer, subtract the desired profit from the selling price.

Step-by-step explanation:

To calculate the target cost for the Slim Slicer, we need to find the cost that allows Jarlsberg to earn a return of 32% of the selling price.

Let's assume the target cost is TC. The selling price is $21.00, and they want to earn a return of 32% of the selling price. So, the profit they want to make is:

Profit = 32% * Selling Price = 32% * $21.00 = $6.72

The target cost can be calculated by subtracting the profit from the selling price:

Target Cost = Selling Price - Profit = $21.00 - $6.72 = $14.28

Therefore, the target cost for the Slim Slicer is $14.28.