Target Costing H. Banks Company would like to design, produce, and sell versatil

Question

Target Costing

H. Banks Company would like to design, produce, and sell versatile toasters for the home kitchen market. The toaster will have four slots that adjust in thickness to accommodate both slim slices of bread and oversized bagels. The target price is $65. Banks requires that new products be priced such that 22% of the price is profit.

Required:

If required, round your answers to two decimal places.

1. Calculate the amount of desired profit per unit of the new toaster.
$

2. Calculate the target cost per unit of the new toaster.
$

Explanation / Answer

1.the amount of desired profit per unit of the new toaster=65*22%=$14.3 per unit

2. the target cost per unit of the new toaster.=$65-desired profit$14.3=$50.7 per unit.

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