What is the target cost reduction

Reference no: EM13158246

KO Toys has recently performed an analysis on a new toy product that they are planning to develop and sell. Marketing has informed them that they will sell 100,000 units per year. The selling price per unit will be $50. They estimate the variable cost per unit to be $30, and total fixed costs to be $1,000,000. Their required return is 20% of the selling price. What is their target cost reduction?

A). $100,000

B). $200,000

C). $250,000

D). $0 - the company has already achieved its required return of 20%

Reference no: EM13158246

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