Question

Sheffield Corp.is contemplating the production and sale of a new widget. Projected sales are $390000 (or 75000 units) and desired profit is $33000. What is the target cost per unit

Answer 1

Unitary cost= $4.76

Step-by-step explanation:

Giving the following information:

Projected sales are $390,000 (or 75000 units), and the desired profit is $33,000.

First, we need to calculate the total desired cost:

Desired total cost= Sales - desired profit

Desired total cost= 390,000 - 33,000= $357,000

Now, the unitary desired cost:

Unitary cost= total cost / number of units

Unitary cost= 357,000/75,000

Unitary cost= $4.76