Question

Calculating a Target Cost RU Listening manufactures cell phones and is developing a new model with a feature (targeted at parents of teens) that prevents the phone from dialing an owner-defined list of phone numbers between the hours of midnight and 6:00 a.m. The new phone model has a target price of $330. Management requires a 10% profit on new product revenues. Required: If required, round to the nearest dollar. Calculate the amount of desired profit. $ Calculate the target cost. $

Answer 1

$33 and $297

Step-by-step explanation:

The computation of the amount of desired profit is shown below:

Desired profit is

= Target price × profit percentage

= $330 × 10 ÷ 100

= $33

And, the Target cost is

= Target revenue - Desired profit

= $330 - $33

= $297

Simply we applied the above formula to determine the desired profit and the target cost