Question

Telecommunications, Inc. is considering producing a new hands-free device that will offer several voice-activated features. After much market research, it has determined that the appropriate target price for the new product is $120. To achieve its normal minimum profit margin of 25%, Electronics must be able to produce the product at a maximum total cost of:

Answer 1

Target total unitary cost= $90

Step-by-step explanation:

Giving the following information:

Target selling price= $120

Minimum profit= 25%

To calculate the target total unitary cost, we need to use the following formula:

Target total unitary cost= seeling price*(1 - minimum profit)

Target total unitary cost= 120*0.75

Target total unitary cost= $90