### answer the following questions using the information below block island tv currently 4300548

Answer the following questions using the information below:

Block Island TV currently sells large televisions for \$360. It has costs of \$280. A competitor is bringing a new large television to market that will sell for \$300. Management believes it must lower the price to \$300 to compete in the market for large televisions. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Block Island TV sales are currently 100,000 televisions per year.

21) What is the target cost if target operating income is 25% of sales?

A) \$75

B) \$90

C) \$225

D) \$270

22) What is the change in operating income if marketing is correct and only the sales price is changed?

A) \$2,200,000

B) \$600,000

C) \$(2,200,000)

D) \$(5,800,000)

23) What is the target cost if the company wants to maintain its same income level, and marketing is correct (rounded to the nearest cent)?

A) \$225.00

B) \$227.27

C) \$246.68

D) \$280.00

Target cost y: \$8,000,000 = (110,000 × \$300) – 110,000y

y = \$25,000,000/110,000 = \$227.27

Answer the following questions using the information below:

Frank&#39;s Computer Monitors, Inc., currently sells 17″ monitors for \$270. It has costs of \$210. A competitor is bringing a new 17″ monitor to market that will sell for \$225. Management believes it must lower the price to \$225 to compete in the market for 17″ monitors. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Frank&#39;s sales are currently 10,000 monitors per year.

24) What is the target cost if operating income is 25% of sales?

A) \$56.25

B) \$67.50

C) \$168.75

D) \$202.50

25) What is the change in operating income if marketing is correct and only the sales price is changed?

A) \$165,000

B) \$45,000

C) \$(165,000)

D) \$(435,000)

26) What is the target cost if the company wants to maintain its same income level, and marketing is correct (rounded to the nearest cent)?

A) \$168.75

B) \$170.46

C) \$185.00

D) \$210.00

27) When the firm uses the target-costing approach to pricing, the target cost per unit is the difference between the per unit target price and the per unit target:

A) contribution margin

B) operating income

C) production costs

D) gross margin

28) Action Toys has a new video game cassette for the upcoming holiday season. It is trying to determine the target cost for the game if the selling price per unit will be set at \$60, the going price for video games, and the firm wants to earn a target operating income of 12% of sales. What will be the target cost per unit for the new game?

A) \$48.00

B) \$52.80

C) \$53.57

D) \$67.20

29) Target pricing is a form of cost-based pricing.

30) The first step in target pricing is to determine the target cost of the product.