The management of Rispoli Corporation is considering introducing a new product-a compact lawn blower.At a selling price of $38 per unit, management projects sales of 10, 000 units.The lawn blower would require an investment of $700, 000.The desired return on investment is 11%. The target cost per lawn blower is closest to:
A)$33.63
B)$30.30
C)$38.00
D)$42.18

Question

Quizplus · Accepted Answer

Target cost = Anticipated selling price - Desired profit
= $38.00 per unit - ($77, 000 ÷ 10, 000 units)
= $38.00 per unit - $7.70 per unit = $30.30 per unit

The Management of Rispoli Corporation Is Considering Introducing a New