Question

Comdex Inc. manufactures parts for the telecom industry. One of its products that currently sells for $210 is now facing a new competitor that offers the same product for $190. The parts currently cost Comdex $180. Comdex believes it must reduce its price to $190 to remain competitive. What is the target cost of the product if Comdex desires a 30% profit on sales dollars?

Answer 1

$147

Step-by-step explanation:

The computation of the target cost of the product if the desired prodit percentage is considered

Given that

Currently sale price = $210

New competitor price = $190

Currently cost = $180

Reduced price = $190

Profit percentage is 30%

So the target cost of the product is

= Sale price - desired profit

= $210 - $210 × 30%

= $210 - $63

= $147