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What is the target variable cost per unit

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Dyggur Traders wishes to earn a 20% return on its $100,000 investment in equipment used to produce dog toys. The fixed costs cannot be changed, but the company wants to set a target cost for the variable portion.

Based on estimated sales of 10,000 toys next year, the price and fixed costs per unit are:

Price: $9.00

Fixed selling and administrative costs: $2.00

Fixed manufacturing cost: $1.00

QUESTION 1: What is the target variable cost per unit?

Reference no: EM132562671

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