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Q) The selling price of a product has been set at $600 per unit,and at that price company the company expects to sell 5,000 units per month. The required mark-up is 20% of cost, and the expected production cost is $520 per unit. What is the target cost gap?
Please provide me the solution at your earliest convenience.
The target cost is 100/120 x 600 = 500.
Therefore the cost gap is 520 – 500 = 20.
The free lecture on target costing explains how to deal with mark-ups.
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