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i saw the answer of the question of 1.but i don’t understand how they got $7.00 as target cost.please tell me how they got that figure.in example 1 part a.question
The question says that the selling price is to be $10.50, and also that they want a mark-up of 50% of cost.
So……for every 100 cost, the selling price would be 150 (100 + 50).
Since the selling price is 10.50, the target cost must be 100/150 x 10.50 = $7(and it checks. If the cost was $7, then the mark-up will be $3.50 (50% of $7), giving a selling price of $10.50 ( 7 + 3.50 ))
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