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 Detailing uses target-costing.What is the price they should quote a new customer?
A) $30
B) $24
C) $57
D) $54
E) $84

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 Detailing uses target-costing.What is the price they should quote a new customer?
A) $30
B) $24
C) $57
D) $54
E) $84

Quizplus · Accepted Answer

Target costing is a method of determining the cost of a product or service based on the price (target price) that customers are willing to pay.They would charge what the market could bear, which is $57.Here, a 40% profit equals $12 or a price of $42.As a result, Victor's will charge market price because it exceeds the lowest acceptable price.

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