Wenner Corporation would like to use target costing for a new product it is considering introducing. At a selling price of $44 per unit, management projects sales of 10,000 units. The new product would require an investment of $900,000. The desired return on investment is 10%.The target cost per unit is closest to:
A) $44.00
B) $38.50
C) $48.40
D) $35.00

Question

Quizplus · Accepted Answer

To find the target cost per unit, first calculate the total desired return on investment: $900,000 * 10% = $90,000. Then, subtract this from the total sales revenue: (10,000 units * $44) - $90,000 = $350,000. Finally, divide by the number of units: $350,000 / 10,000 units = $35.00.

Wenner Corporation Would Like to Use Target Costing for a New