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Managerial Accounting 14th Edition by Ray Garrison ,Eric Noreen ,Peter Brewer 4
Edition 14ISBN: 978-0077909703Managerial Accounting 14th Edition by Ray Garrison ,Eric Noreen ,Peter Brewer 4
Edition 14ISBN: 978-0077909703 Exercise 3
Target Costing
Eastern Auto Supply, Inc., produces and distributes auto supplies. The company is anxious to enter the rapidly growing market for long-life batteries that is based on lithium technology. Management believes that to be fully competitive, the price of the new battery that the company is developing cannot exceed$65. At this price, management is confident that the company can sell 50,000 batteries per year. The batteries would require an investment of $2, 500,000, and the desired ROI is 20%
Requ ired:
Compute the target cost of one battery.
Eastern Auto Supply, Inc., produces and distributes auto supplies. The company is anxious to enter the rapidly growing market for long-life batteries that is based on lithium technology. Management believes that to be fully competitive, the price of the new battery that the company is developing cannot exceed$65. At this price, management is confident that the company can sell 50,000 batteries per year. The batteries would require an investment of $2, 500,000, and the desired ROI is 20%
Requ ired:
Compute the target cost of one battery.
Explanation
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To find the target cost per ba...
Managerial Accounting 14th Edition by Ray Garrison ,Eric Noreen ,Peter Brewer 4
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