Target Cost Calculation Quiz

The selling price of product Z is set to be $250 for each unit and sales for the coming year are expected to be 500 units. The company requires a return of 15% in the coming year on its investment of $350,000 in product Z. What is the target cost for each unit of Z for the coming year? Select from the list as appropriate.

• $105

• $145

• $212.5

• $250

The selling price of product Z is set to be $380 for each unit and sales for the coming year are expected to be 500 units. The company requires a return of 20% in the coming year on its investment of $350,000 in product Z. What is the target cost for each unit of Z for the coming year? Select from the list as appropriate.

• $380

• $145

• $304

• $240

Dimo Co. wants to calculate a target cost for a new product X. The price of X will be set at $20,950. The company requires a 12% profit margin on sales. What is the target cost?

• $18,436

• $18,705

• $20,950

• $23,464

Dimo Co. wants to calculate a target cost for a new product X. The price of X will be set at $51,020. The company requires a 15% profit margin on sales. What is the target cost?

• $58,673

• $28,911

• $43,367

• $34,013

BL Co. is about to start developing a new product for launch in its existing market. They have forecast sales of 30,000 units and the marketing department suggests a selling price of $45/unit. The company seeks to make a mark-up of 40% product cost. It is estimated that the lifetime costs of the product will be as follows: Design and development costs $45,000. Manufacturing costs $15/unit. Plant decommissioning costs $30,000. The company estimates that if it were to spend an additional $15,000 on design manufacturing costs/unit could be reduced. What is the life-cycle cost per unit of the new product?

• $17.5

• $18

• $23.5

• $24

BL Co. is about to start developing a new product for launch in its existing market. They have forecast sales of 35,000 units and the marketing department suggests a selling price of $45/unit. The company seeks to make a mark-up of 40% product cost. It is estimated that the lifetime costs of the product will be as follows: Design and development costs $60,000. Manufacturing costs $15/unit. Plant decommissioning costs $45,000. The company estimates that if it were to spend an additional $15,000 on design manufacturing costs/unit could be reduced. What is the life-cycle cost per unit of the new product?

• $17.5

• $18

• $23.5

• $24

The contribution ratio of product A is 40%. The manufacturer of product A wishes to make a contribution of $100,000 towards fixed costs. If the selling price is 5$ per unit, the number of units of A that must be sold is:

• 50,000 units

• 40,000 units

• 20,000 units

• 8,000 units

The contribution ratio of product A is 40%. The manufacturer of product A wishes to make a contribution of $200,000 towards fixed costs. If the selling price is 4$ per unit, the number of units of A that must be sold is:

• 80,000 units

• 50,000 units

• 16,000 units

• 125,000 units

A company makes a single product and incurs fixed costs of $100,000 per month. Variable cost per unit is $10 and each unit sells for $20. It's budgeted to sell 10,000 units monthly. How much is a contribution earned from each $1 of sales revenue?

• $2

• $1

• $0.5

• $0.25

A company makes a single product and incurs fixed costs of $200,000 per month. Variable cost per unit is $20 and each unit sells for $40. It's budgeted to sell 20,000 units monthly. How much is a contribution earned from each $2 of sales revenue?

• $2

• $1

• $0.5

• $0.25