Bouchard Company manufactures a product that currently has a full cost of $700. Its target operating income per unit is $80 and management's budgets assume that same target operating income per unit for the foreseeable future. To stay competitive, Bouchard management believes it must cut its price by 25%. What will be its new target cost?
A) $700
B) $505.00
C) $585.00
D) $80

Question

Quizplus · Accepted Answer

The price now is $780 ($700 + $80). A 25% drop would bring the price down to 11ea1398_f0c1_a25d_a1e4_6f56cf7380df_TB3027_11 . The new price of $585.00 less the target profit of $80 per unit would equal $505.00.

Bouchard Company Manufactures a Product That Currently Has a Full