Target Costing

Hi Sir

Sorry I am having a mind block moment.

Question-

Product cost $10
target profit= 25% on cost
current cost=8.40

whats the target cost gap?

Target costing= Market price- desired profit margin
$10-(25%*8.40)= 10-2.1= 7.90
8.40-7.90= =0.50

but the answer is wrong?

The solution goes on to calculate the target profit as 25% on cost is the same as 20% on price. I am confused by this statement. how is 25% on cost the same as 20% on price?

thanks