Question

Williams Widget Company is contemplating the production and sale of a new widget. Projected sales are $42,000 (or 14,000 units) and desired profit is $4,200. What is the target cost per unit?a) $2.50b) $2.20c) $2.80d) $3.00

Answer 1

the target cost per unit is $2.70 per unit

Step-by-step explanation:

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

The Target cost per unit is

= (Projected sales - desired profit) ÷ (number of units sold)

= ($42,000 - $4,200) ÷ (14,000 units)

= ($37,800) ÷ (14,000 units)

= $2.70 per unit

hence, the target cost per unit is $2.70 per unit

This is the answer but the same is not provided in the given options

We simply applied the above formula so that the correct value could come

And, the same is to be considered