custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit.Assume variable cost is $200 per suit,fixed cost is $44,000,and the target profit is $50,000 based on a volume of 50 suits.What price should be charged for a typical custom suit?

Question

Quizplus · Accepted Answer

The correct price is $2,080. The total cost is $200 + $44,000 / 50 = $1,040. The target profit is $50,000 / 50 = $1,040. The price should be $1,040 + $1,040 = $2,080.

Custom Tailor Wishes to Use Target Profit Pricing to Establish