Shredder Inc. produces paper shredders. The company is considering a new shredder design for home offices. The marketing vice president believes that a basic unit in a variety of attractive colours could be sold for $100. The company requires that all new products yield 35% profit. What is the target cost of the new shredder?

Question

Quizplus · Accepted Answer

The target cost of the new shredder can be calculated as:
Selling price - Desired profit = Target cost
$100 - (35% of $100) = $100 - $35 = $65. Therefore, the target cost of the new shredder is $65. Option C is the correct answer.