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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Target costing question
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?
The 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.