- This topic has 3 replies, 2 voices, and was last updated 4 years ago by
.
Viewing 4 posts - 1 through 4 (of 4 total)
- Posts
Company uses full cost plus pricing. Target selling price is 45. Profit margin is 35%. I tried to calculate the profit like this (35/135*45) and then subtracting it from the selling price to arrive at a target cost of 33.33. Target cost in the answer is 29.25. Whats going on here ?
You have treated it as though the mark-up is 35%.
The question says that the profit margin is 35% and so the profit is 35% of the selling price (not of the cost). So the cost is 65% of the selling price..
65% x $45 = $29.25
Viewing 4 posts - 1 through 4 (of 4 total)
- The topic ‘Target cost’ is closed to new replies.