Question

Sheffield Corp. is using the target cost approach on a new product. Information gathered so far reveals: Expected annual sales 300000 units Desired profit per unit $0.35 Target cost $174000 What is the target selling price per unit

Answer 1

target selling price= $0.93

Step-by-step explanation:

Giving the following information:

Expected annual sales 300,000 units

Desired profit per unit $0.35

Target cost $174,000

First, we need to calculate the unitary target cost:

unitary target cost= 174,000 / 300,000

unitary target cost= $0.58

Now, the target selling price:

target selling price= 0.35 + 0.58

target selling price= $0.93