Wenner Corporation Would Like to Use Target Costing for a New

question 178

Multiple Choice

Wenner Corporation would like to use target costing for a new product it is considering introducing. At a selling price of $44 per unit, management projects sales of 10,000 units. The new product would require an investment of $900,000. The desired return on investment is 10%.The target cost per unit is closest to:

• A) $44.00
• B) $38.50
• C) $48.40
• D) $35.00

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Definitions:

Takings Clause

A clause in the Fifth Amendment of the U.S. Constitution requiring that when government uses its power to take private property for public use, it must pay the owner just compensation, or fair market value, for the property.

Condemnation

The legal process by which government or a legal entity takes private property for public use, with compensation to the owner.

Fifth Amendment

An amendment to the U.S. Constitution that provides several protections to individuals, including protection against self-incrimination and double jeopardy, and ensures due process of law.

State Common Law

Law that originates from decisions made by judges in state courts, rather than laws passed by state legislatures or Congress.