Question

A new product, an automated crepe maker, is being introduced at Miyake Corporation. At a selling price of $52 per unit, management projects sales of 38,000 units. Launching the crepe maker as a new product would require an investment of $228,000. The desired return on investment is 20%. The target cost per crepe maker is closest to:___________.
Noreen rechecks 2017-04-04
a) $66.61
b) $62.63
c) $54.20
d) $50.80

Answer 1

Answer:

d) $50.80

Explanation:

The computation of the target cost per crepe maker is as follows:

But before that

Return per unit is

= ($228,000 × 20%) ÷ 38,000  units

= $1.20

Now  

The target cost per crepe maker is

= $52 - $1.20

= $50.80

hence, the target cost per crepe maker is $50.80

Therefore the correct option is d.

And all the other options are incorrect