Answer the following questions using the information below:
Elliott Manufacturing has decided to produce a new interior door to complement its exterior door line.The new door is expected to sell for $60 each,and the annual target sales volume for the doors is 20 000.Elliott has target operating profit of 20% of sales.
-What is the target cost?
A)$1 260 000
B)$960 000
C)$900 000
D)$1 008 000

Question

Quizplus · Accepted Answer

The target cost can be calculated by first determining the target sales revenue, which is 20,000 doors at $60 each, totaling $1,200,000. With a target operating profit of 20% of sales, the target profit is $1,200,000 * 20% = $240,000. Subtracting this target profit from the sales revenue gives the target cost: $1,200,000 - $240,000 = $960,000.

Answer the Following Questions Using the Information Below