Wenner Corporation Would Like to Use Target Costing for a New

question 168

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 desired profit according to the target costing calculations is:

• A) $90,000
• B) $350,000
• C) $44,000
• D) $440,000

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Definitions:

Yardstick Approach

A method of evaluation that involves comparing a current situation or performance against a standard measure or "yardstick."

Logical Arguments

Reasoning that follows a clear, structured line of thought, typically leading from premises to a conclusion.

Benchmarks

Standard points of reference against which things may be compared or assessed.

Criteria

Standards or principles by which something is judged or decided.