Electronic Component Company is a producer of high-end video and music equipment.ECC currently sells its top of the line "ECC" DVD player for a price of $250.It costs ECC $210 to make the player.ECC's main competitor is coming to market with a new DVD player that will sell for a price of $220.ECC feels that it must reduce its price to $220 in order to compete.The sales and marketing department of ECC believes the reduced price will cause sales to increase by 15%.ECC currently sells 200,000 DVD players per year.
What is the target cost if target profit is 20% of sales and ECC must meet the competitive price of $220?
A)$168.50.
B)$176.00.
C)$184.25.
D)$190.00.
0)8 x $220 = $176.00

Question

Quizplus · Accepted Answer

The target cost is calculated by subtracting the target profit from the competitive price. Target profit is 20% of the sales price, which is 20% of $220, equaling $44. Therefore, the target cost is $220 - $44 = $176.00.

Electronic Component Company Is a Producer of High-End Video and Music