Chester Company plans to introduce a new product.A market research specialist claims that 20,000 units can be sold at a $100 selling price.Assuming the company desires a profit margin of 22% of sales,what is the target cost per unit?
A) $128.21
B) $78
C) $80
D) $20

Question

Quizplus · Accepted Answer

To achieve a profit margin of 22% of sales, the target cost per unit must be 78% of the selling price (100% - 22% = 78%). Therefore, the target cost per unit is 78% of $100, which is $78 ($100 * 0.78 = $78).

Chester Company Plans to Introduce a New Product