Irisen Company has designed a caller ID machine with a large screen that can be seen easily from across the room.The sales department believes that this product can be sold for $40 each.Irisen requires that all new products yield 10% profit.What is the target cost of the new product?
A) $41
B) $28
C) $14
D) $36
E) $25

Question

Quizplus · Accepted Answer

Target Cost = Target Price - Desired Profit* = $40   $4 = $36
 
Desired profit* = Profit margin × Selling price = 0.10 × $40 = $4

Irisen Company Has Designed a Caller ID Machine with a Large