Royal Bath,Inc.is considering the production of a new bathroom vent system.The Marketing Department has determined that there would be demand for the product at or below a selling price of $175 per unit.Anticipated unit costs are as follows:
Royal uses the following activity-based costs:
The company's desired profit is 25 percent over total production and shipping costs.
Calculate the target cost for this product and determine whether or not it should be produced.

Question

Royal Bath,Inc.is considering the production of a new bathroom vent system.The Marketing Department has determined that there would be demand for the product at or below a selling price of $175 per unit.Anticipated unit costs are as follows:
 Royal uses the following activity-based costs:
  The company's desired profit is 25 percent over total production and shipping costs.
Calculate the target cost for this product and determine whether or not it should be produced.

Quizplus · Accepted Answer

The Answer of Royal Bath,Inc.is considering the production of a new bathroom vent system.The Marketing Department has determined that there would be demand for the product at or below a selling price of $175 per unit.Anticipated unit costs are as follows:
 Royal uses the following activity-based costs:
  The company's desired profit is 25 percent over total production and shipping costs.
Calculate the target cost for this product and determine whether or not it should be produced.