Determine the target cost for company a product

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Reference no: EM133164459

Question - Company A operates in a highly competitive market where the market price for its product is $50 per unit. Company A desires a $15 profit per unit. Company A expects to sell 5,000 units. Additional information is as follows:

Variable product cost per unit $15

Variable administrative cost per unit 10

Total fixed overhead 45,000

Total fixed administrative 18,000

Required -

a) Determine the target cost for Company A's product for it to achieve $15 profit per unit.

b) To achieve the target cost per unit, by how much must Company A reduce total expenses?

Reference no: EM133164459

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