Question

Barry Boots Inc. is considering adding a new line of boots. Based on preliminary market research, management has decided that each pair of boots should be priced at $300. Furthermore, management believes that the profit margin should be 30 percent of sales revenue.

What is the target cost?
a. $150.75
b. $225.50
c. $260.00
d. $157.50

Answer 1

the target cost is $210

Step-by-step explanation:

The computation of the target cost is shown below;

Given that

sale price = $300

Profit margin = 30%

Now

Profit = $300 × 30%

= $90

Since the profit is $90

So, the Cost is

= sales - profit

= $300 - $90

= $210

hence, the target cost is $210

This is the answer but the same is not provided in the given options