Appalachee Company produces gaskets for the automotive industry. Current production cost is $3.50 per gross. There is a highly competitive market for the product, and Appalachee currently uses a target pricing approach. Currently, equivalent products are selling for $4.75 per gross. Apalachee wishes to earn a minimum of a 40% markup over cost. What would be their most appropriate response? (Please round all amounts to the nearest cent.)
A) Reduce production cost by $0.11 per gross.
B) Reduce production cost by $0.05 per gross.
C) Increase price to $4.90 per gross.
D) Increase price to $4.85.

Question

Quizplus · Accepted Answer

A) Calculations:
$4.75/140% = $3.39
$3.39 - $3.50 = ($0.11)

Appalachee Company Produces Gaskets for the Automotive Industry