Twenty Technologies, Currently Sells 17" Monitors for $280

question 174

Multiple Choice

Twenty Technologies, currently sells 17" monitors for $280. It has costs of $220. A competitor is bringing a new 17" monitor to market that will sell for $230. Management believes it must lower the price to $230 to compete in the market for 17" monitors. Twenty Technologies believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Twenty Technologies' sales are currently 5100 monitors per year.
What is the target cost if the target operating income is 25% of sales?

• A) $230.00
• B) $210.00
• C) $172.50
• D) $165.00

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