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TARGET COSTING

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › TARGET COSTING

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by LMR1006.
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  • October 1, 2023 at 6:37 am #692676
    Arshi-16
    Participant
    • Topics: 23
    • Replies: 6
    • ☆

    chapter 4 ,Test your understanding 6 ,study text

    how did we got that the target cost is $181.82

    October 1, 2023 at 11:19 am #692688
    LMR1006
    Keymaster
    • Topics: 4
    • Replies: 1517
    • ☆☆☆☆☆

    The maximum price is $200, this includes a mark up of 10%

    So the $200 is 110% of the cost.

    This means that to find the cost of the unit you have to divide $200 by 110 and multiply by a 100.
    200/110 * 100 = 181.82
    Or alternatively you have to divide $200 by 1.1 because the selling price includes the 10% mark up.

    See if you do it the other way as you would to with a mark-up of 10%
    181.8181* 1.1 = $200

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