Rica Company is a price-taker and uses target pricing. Refer to the following information: How much is the target full product cost per unit? (Round your answer to nearest cent.)Assume all units produced are sold.

Question

Rica Company is a price-taker and uses target pricing. Refer to the following information:  How much is the target full product cost per unit? (Round your answer to nearest cent.)Assume all units produced are sold.

Quizplus · Accepted Answer

To calculate the target full product cost per unit, we need to subtract the desired profit margin from the target selling price. Target selling price is given as $150 per unit. Desired profit margin is 15% of the selling price, which is $22.50. Therefore, target cost per unit is $150 - $22.50 = $127.50. Since Rica Company uses target pricing, they want to sell the product at a price that covers their costs and desired profit margin. Therefore, the target cost per unit is also the target full product cost per unit. Rounded to the nearest cent, the answer is $26.53.

Rica Company Is a Price-Taker and Uses Target Pricing