The following information is available for a product:
Target selling price £20 per unit
Target mark-up on cost 1/3
Estimated product cost £16 per unit
What is the target cost gap for this product
Answer
Target cost = 3/4 * £20 =£15
please advise how you work out 3/4 when target mark-up on cost is 1/3
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5y ago#1For every $3 of cost, the profit is 1/2 x $3 = $1, and therefore the selling price is $4.
Therefore the cost is $3 for every $4 of selling price.
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