Answer the following questions using the information below:
Sales of Blair Inc. have been on a steady decline for the last 12 months. A market research study conducted revealed that the product of Blair Inc. can be sold only for $400 as opposed to the current market price charged of $500 per unit. Blair Inc. has decided to revise its sales price to $400. The annual sales target volume of the product after price revision is 200 units. Blair Inc. wants to earn 18% on its sales amount.
-What is the total target cost?
A) $77,408
B) $65,600
C) $53,792
D) $14,760

Question

Quizplus · Accepted Answer

The sales revenue at the new price is 200 units * $400 = $80,000. To earn an 18% profit, the cost must be 82% of the sales revenue. Thus, the target cost is 82% of $80,000, which is $65,600.

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