Teller Company Has Designed a Caller ID Machine with a Large

question 6

Multiple Choice

Teller Company has designed a caller ID machine with a large screen that can be seen easily from across the room. The Sales Department believes that this product can be sold for $30 each. Teller requires that all new products yield 15% profit. What is the target cost of the new product?

• A) $26
• B) $4.50
• C) $30
• D) $25.50
• E) $28.50

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Definitions:

Capital

Financial assets or the financial value of assets, such as cash and goods, used by an organization to fund its operations and grow.

Revenue Account

An account that records the income generated from selling goods or providing services, which contributes to a company's gross income.

Income Summary

An account used during the closing process to summarize the year's revenues and expenses before determining and transferring the period's net income or loss to owner's equity.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts.