Que - Projected lifetime sales volume 50,000 units
Target selling price per unit $200
Target profit margin 35%
need to calculate the target cost ?
Answer suggest that 200 - (200*35%) = 130
however if the profit margin is on sales will we not calculate it like the below:
200 - (200*35/135)
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Target cost
5y ago#1No.
The profit is 35% of sales and so is 35% x 200 = $70.
Therefore the target cost is 200 - 70 = $130.
What you want to do would only be correct if the question had said that the profit was 35% of cost.
Oh okay got it sir.. Thank you !
5y ago#3You are welcome :-)
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