Victor's Detailing customers would be willing to pay $57 per detail.The company requires a 40% profit on each job.The average job would cost $30.
- Victor's uses target costing.Victor's Detailing should:

A) sell their business.
B) ask their customers to pay more.
C) sell their services at the price customers are willing to pay.
D) find a way to reduce costs.
E) reduce their required percentage to stay in business.

Question

Victor's Detailing customers would be willing to pay $57 per detail.The company requires a 40% profit on each job.The average job would cost $30. 
-  Victor's uses target costing.Victor's Detailing should:
 
A) sell their business.
B) ask their customers to pay more.
C) sell their services at the price customers are willing to pay.
D) find a way to reduce costs.
E) reduce their required percentage to stay in business.

Quizplus · Accepted Answer

Target cost = Price - (price × profit percent) = $57 -($57 × 0.40) = $57 - $22.80 = $34.20
Victor's cost is below the target cost.He should sell at what the market will pay.

Victor's Detailing Customers Would Be Willing to Pay $57 Per