Hi sir,
A company has a target mark up of 25% and sells into a competitive market where the market price is $120
per unit. The company’s current costs per unit are $46 for variable costs and $60 for fixed costs, and it has
a budgeted output of 10,000 units.
What is the minimum production required to close the target cost gap?
A 11,778 units
B 13,636 units
C 11,042 units
D 12,000 units
I saw in one of your previous answers regarding the above question that is related to CVP analysis. How does the question help you to understand it?
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Target costing question
4y ago#1The only cost that is going to change is the fixed cost per unit of $60. The more units that they produce then the lower the fixed cost per unit.
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