Question

You bought a cell-phone from through a distributor((distributor kept a profit margin of 30%), and a retailer for $150 (retailer kept a profit margin of 20%), and the cell-phone manufacturer wanted to make 10% profit, then the target cost for that cell-phone is:

$64.60

$75.60

$101.60

$105.60

Answer: ___

Answer 1

The target cost is
`\$ 75.60`

Explanation:

From the question we are told that

The distributors profit margin is 30%

The retailers price of the phone is $150

The retailers profit margin is 20%

The profit to be made by manufacture is 10%

Generally profit margin is mathematically represented as

`PM = (NI)/(NS)`

Here NI is Net income

NS is Net sales

Generally the profit of the retailer from the price of the phone is

`PR = (20)/(100) * 150`

=>
`PR = \$ 30`

Generally the cost price for the retailer which is also the selling price of the distributor is

`CR = 150 - PR`

=>
`CR = 150 - 30`

=>
`CR = $120`

Generally the profit for the distributor is

`PD = (30)/(100) * 120`

`PD = \$ 36`

Generally the cost price for the distributor which is also the selling price the manufacturer is

`CD = CR - PD`

=>
`CD = 120 - 36`

=>
`CD = $ 84`

Generally the profit for the manufacturer is

`PM = (10)/(100) * CD`

=>
`PM = (10)/(100) * 84`

=>
`PM = \$ 8.4`

Generally the target cost is mathematically represented as

`T = CD - PM`

=>
`T = 84 - 8.4`

=>
`\$ 75.60`