Solution-Determine what is target cost if company wants to

Determine what is target cost if company wants to maintain

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Reference no: EM132611542

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.

Question 1: What is the target cost if operating profit is 25% of sales?

Question 2: What is the change in operating profit if Marketing is correct and only the sales price is changed?

Question 3: What is the target cost if the company wants to maintain its same profit level, and Marketing is correct (rounded to the nearest cent)?

Reference no: EM132611542

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Determine what is target cost if company wants to maintain

Reference no: EM132611542

Reference no: EM132611542

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