Cornerstone Exercise 13-21 Calculating a Target Cost Yuhu manufactures cell phones and is developing a new model with a feature (aptly named Don’t Drink and Dial) that prevents the phone from dialing an owner-defined list of phone num- bers between the hours of midnight and 6:00 A.M. The new phone model has a target price of $380. Management requires a 25% profit on new product revenues.   Required: 1.       Calculate the amount of desired profit. 2.       Calculate the target cost.

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Chapter16: Financial Planning And Control
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Cornerstone Exercise 13-21 Calculating a Target Cost

Yuhu manufactures cell phones and is developing a new model with a feature (aptly named Don’t Drink and Dial) that prevents the phone from dialing an owner-defined list of phone num- bers between the hours of midnight and 6:00 A.M. The new phone model has a target price of

$380. Management requires a 25% profit on new product revenues.

 

Required:

1.       Calculate the amount of desired profit.

2.       Calculate the target cost.

 

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