Block Island TV Currently Sells Large Televisions for $380

question 191

Multiple Choice

Block Island TV currently sells large televisions for $380. It has costs of $290. A competitor is bringing a new large television to market that will sell for $310. Management believes it must lower the price to $310 to compete in the market for large televisions. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Block Island TV sales are currently 110,000 televisions per year.
What is the target cost per unit if target operating income is 35% of sales?

• A) $108.50
• B) $133.00
• C) $201.50
• D) $247.00

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Definitions:

Déjà Vu

A peculiar experience of feeling that one has already witnessed or experienced a current situation, despite it being novel.

Proactive Interference

The process by which previous memories obstruct the remembrance of newer ones.

Positive Transfer

The beneficial effect of past learning on the acquisition of new knowledge or skills.

Repressed

The involuntary suppression of thoughts, memories, or feelings from consciousness, often as a defense mechanism against trauma or stress.