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Calculate target cost if operating profit is sales

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Problem 1: Ace Books Company currently sells eBook readers for $270. It has costs of $210. A competitor is bringing a new eBook reader to market that will sell for $225. Management believes it must lower the price to $225 to compete in the market for eBook readers. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Ace's sales are currently 10 000 eBook readers per year. how to calculate target cost if operating profit is 25% of sales?

Reference no: EM132618724

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