Sandra Clothing Company has invested $51,000,000 in its business. The target rate of return for the company is 12%. It has long-term assets of $23,000,000. Cost of debt for the company is 8%. It expects to sell 12,000 units in the upcoming year. What will be the target operating income per unit for Sandra Clothing Company?

Question

Quizplus · Accepted Answer

Target operating income = $51,000,000 × 12% = $6,120,000
Target operating income per unit = $6,120,000 /12,000 units = $510 per unit

Sandra Clothing Company Has Invested $51,000,000 in Its Business