Question

Waterway Industriesis contemplating the production and sale of a new widget. Projected sales are $315000 (or 75000 units) and desired profit is $45000. What is the target cost per unit? $6.00 $3.60 $4.20 $4.80

Answer 1

Based on the information given the target cost per unit is $3.60.

Using this formula

Target cost per unit=Projected sales-Desired profit/Units

Where:

Projected sales=$315,000

Desired profit=$45,000

Units=75,000

Let plug in the formula

Target cost per unit=$315,000-$45,000/75,000

Target cost per unit=$270,000/75,000

Target cost per unit=$3.60

Inconclusion the target cost per unit is $3.60.

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