Use the information below to answer the following question(s).Acorn Products currently sells small boats for $360.It has costs currently assigned to it of $280.A competitor is bringing a new small boat to market that will sell for $300.Management believes it must lower the price to $300 to compete in the market for small boats.Marketing believes that the new price will cause sales to increase by 10 percent, even with a new competitor in the market.Acorn's sales are currently 100,000 per year.
-What is the target cost if target profit is 25 percent of the competitor's selling price?

Question

Quizplus · Accepted Answer

First, calculate the competitor's selling price: 
Competitor's selling price = $300

Next, calculate target profit: 
Target profit = 25% of $300 = $75

Then, calculate the target cost: 
Target cost = competitor's selling price - target profit = $300 - $75 = $225

Therefore, the target cost is $225. Choice C is the correct answer.

Use the Information Below to Answer the Following Question(s)