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Dear John,
Fromt he following question I don’t understand how is the answer gotten. Would you mind to give me some light? The question is : given the following information what is the target cost gap for product X? Product X target selling price per unit $10; target profit 25% on cost; current cost $8.40 per unit..\ Thank you for your help.
Best regards,
Miguel
Selling Price = $10
Target Cost = $8 (10/1.25) for markup on cost
Current Cost = $8.40
Therefore cost gap = $0.40 ..Correct?Correct! Thank you! I’m a bit blocked after all day of studying …I’m taking a break now! 🙂
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