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sol- total no of units- 50000
sales price/unit- $ 10.50
total sales price-$ 525000
total production cost-$390000return=50/100 of 390000=$195000
target cost=525000-195000
——————– =======$6.6 per unit
50000 unitssir …..the process by which I have done giving me clear picture of target costing ..is tis way is correct…pls reply sir
What you have done is not correct – the target cost is $7 per unit (as per the answer to the example given in the lecture notes).
You should watch the free lecture on life-cycle costing where I work through and explain this example. (As is clearly stated on the first page of the lecture notes, you should not use the notes on their own – they are only lecture notes, and it is in the free lectures that we explain and expand on the topics).
Our free lectures are a complete course for Paper F5 and cover everything needed to be able to pass the exam well.
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