So in the previous video of target costing lecture 1. in the example you used the formula (25/125)*50 where 25 represents the mark-up. but in this video instead of using the same formula you used (100/150)*10.5 in which the 100 represents the cost. And so I would like to know which to use.

And thank you for making these videos they are a big help.

But it is the same arithmetic except that in the first case we want to know what the mark up was whereas in the second case we want to know what the cost is!!! Had we want to know the cost in the first example we would have multiplied by 100/125

Good evening sir. I think I worked this out the long way but I arrived at the same answer. What I did intially is =>$390,000+$20,000 = $410,000梅50,000 =8.2 Then $8.20- $7.00 = $1.20 ? $1.20 * 50,000 =$60,000

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foul says

Hello John,

So in the previous video of target costing lecture 1. in the example you used the formula (25/125)*50 where 25 represents the mark-up. but in this video instead of using the same formula you used (100/150)*10.5 in which the 100 represents the cost. And so I would like to know which to use.

And thank you for making these videos they are a big help.

John Moffat says

But it is the same arithmetic except that in the first case we want to know what the mark up was whereas in the second case we want to know what the cost is!!!

Had we want to know the cost in the first example we would have multiplied by 100/125

foul says

thank you for the clarification, and the swift reply.

santina96 says

Good evening sir. I think I worked this out the long way but I arrived at the same answer.

What I did intially is

=>$390,000+$20,000

= $410,000梅50,000

=8.2

Then $8.20- $7.00 = $1.20

? $1.20 * 50,000

=$60,000

Which I then subtracted from the $300,000.

But overall I love your method more.

Thank you..

John Moffat says

What matter is ending up with the right answer – the method you use does not matter 馃檪

elenaakhra says

Thank you very much dear Tutor. And thank you very much for your resourse.

John Moffat says

Thank you for your comment 馃檪

John Moffat says

mami9561: You are welcome, and thank you for your comment 馃檪

mami9561 says

Thanks a lot Mr. Moffat for your explanation and it’s much appreciated..

joanaana says

Hello John.

Firs of all thanks for your lectures.

In this exercise I don’t understand c point why extra in manufacturing is 20000.

Thanks

John Moffat says

If I understand your question correctly, it is because the question says that they would have to spend and extra $20,000 on design.

(I assume that you have downloaded the free lecture notes that are needed for the lectures)

amankaur says

Gaah ! I wish I found out about opentuition earlier! I don’t know why employers keep you guys a secret, much better than in class courses!

John Moffat says

Maybe employers fo not know about us – please do tell people 馃檪

And thanks a lot for your comment 馃檪

alie2018 says

Thanks John.

John Moffat says

You are welcome 馃檪