Tire Kingdom requires a 60% profit margin on it dirt bike racing tires.At a price of $78 per tire the company expects to sell 16,000 tires.How much is the company's target cost on each tire?

Question

Quizplus · Accepted Answer

To find the target cost, use the formula: Cost = Selling Price / (1 + Profit Margin). Here, Cost = $78 / (1 + 0.60) = $78 / 1.60 = $48.75. However, the correct calculation should be $78 * (1 - 0.60) = $31.20.

Tire Kingdom Requires a 60% Profit Margin on It Dirt