Ron White Inc.plans to introduce a new product and is using the target cost approach.Projected sales revenue is $810,000 ($4.05 per unit) and target costs are $730,000.What is the desired profit per unit?

Question

Quizplus · Accepted Answer

The desired profit is the difference between projected sales revenue and target costs, which is $810,000 - $730,000 = $80,000. Given that the sales revenue per unit is $4.05, the number of units is $810,000 / $4.05 = 200,000 units. Therefore, the desired profit per unit is $80,000 / 200,000 units = $0.40.