Target Cost Gap

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May 15, 2015 at 6:50 pm #246244
amg
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Product X target selling price per unit $ 10
Target profit 25% on cost
Current Cost $8.40 per unit

Which is the target cost gap?
Solution

target profit (25% of cost =20% of sales price) = $ 2 Why, could ou please explain the method?
target cost $ 10-$2= $8
target cost gap = $8.40-8$ = $0.40
May 16, 2015 at 8:02 am #246291
John Moffat
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Please don’t post the same question twice! I have answered your other identical post.
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