The marketing department at Surge Electronics has determined that there is a demand for a new small appliance, which would likely sell for $36.Surge Electronics currently produces a similar product for $38, using a full-cost approach.Surge Electronics would like to earn a 10% profit on the new appliance.The target cost of the new appliance is _____.
A)$38.00
B)$36.00
C)$32.73
D)$28.80

Question

Quizplus · Accepted Answer

To achieve a 10% profit on a selling price of $36, the target cost can be calculated as follows:
Target cost = Selling price - Profit
Target cost = $36 - 10% of $36
Target cost = $36 - $3.60
Target cost = $32.40
Therefore, the target cost of the new appliance is $32.40, which is closest to option C ($32.73).

The Marketing Department at Surge Electronics Has Determined That There