Menu
support@businesspapershelp.com
+1(805) 568 7317

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'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'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.

 

 

 

"Order a similar paper and get 15% discount on your first order with us
Use the following coupon
"GET15"

Order Now