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The following information has been collected about a new Product B.
Product B expected selling price per unit $15
Target profit 25% on cost
Current cost $12.60 per unit
What is the target cost gap for Product B?
A. $0.60
B. $0.90
C. $1.35
D. $2.40Target profit (25% of cost = 20% of selling price)- I dont understand this bit- where are they getting the 20%?
= $3
Target cost: = $15 – $3
= $12
Cost gap = $12.60 – $12
= $0.60
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