Answer the following questions using the information below:
After conducting a market research study, Harry Products decided to produce an electric coffee pot to complement its line of kitchen products. It is estimated that the new coffee pot can be sold at a target price of $23. The annual target sales volume for the coffee pot is 300,000. Potter has target operating income of 18% of sales.
-What is the target operating income?
A)$1,200,000
B)$600,000
C)$621,000
D)$1,242,000

Question

Quizplus · Accepted Answer

The target operating income is calculated as 18% of the total sales revenue. The total sales revenue is the target price ($23) multiplied by the annual target sales volume (300,000), which equals $6,900,000. Therefore, the target operating income is 18% of $6,900,000, which is $1,242,000.

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