Question

Crane Company is contemplating the production and sale of a new widget. Projected sales are $375000 (or 75000 units) and desired profit is $30000. What is the target cost per unit?

Answer 1

$0.1

Step-by-step explanation:

Data provided

Projected Sales = $37,500

Desired profit = $30,000

Number of units sold = 75,000

The computation of target cost per unit is shown below:-

Targeted total cost = Projected Sales - Desired profit

= $37,500 - $30,000

= $7,500

Target cost per unit = Targeted total cost ÷ Number of units sold

= $7,500 ÷ 75,000

= $0.1