Question

"Beta Company manufactures laptops and is designing a new model that has very advanced features, which Beta hopes consumers will view as high-end features. The new laptop has a target price of $500. Management requires a 30% profit on new product revenues. Calculate the target cost of the laptop."

Answer 1

Target cos of Laptop is $385

Step-by-step explanation:

Target Cost calculated by deducting the target margin from competitive market price. Target cost is calculated to keep the business competitive in the market.

As we know

Selling price = Cost + Profit

130% = 100% + 30%

By using above equation we can have

Target cost = $500 x 100% / 130% = $384.6

Target cos of Laptop is $385