Answer the Following Question(s)using the Information Below

question 157

Multiple Choice

Answer the following question(s) using the information below.After conducting a market research study, Schultz Manufacturing decided to produce a new interior door to complement its exterior door line.It is estimated that the new interior door can be sold at a target price of $60.The annual target sales volume for interior doors is 20,000.Schultz has target operating income of 20% of sales.
-What is the target cost?

• A)$800,000
• B)$960,000
• C)$1,440,000
• D)$1,600,000
• E)$768,000

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Definitions:

Amortization

The gradual reduction of a debt or the cost of an intangible asset over a specific period of time through regular payments.

Net Income

The amount of earnings left over after all expenses and taxes have been subtracted from total revenue; a key indicator of a company's profitability.

Equity Method

An accounting technique used by a parent company to record its investments in subsidiaries or affiliates based on the equity stake's pro-rata share of net assets rather than the historical cost of the investment.

Stockholders' Equity

The remaining value of a company's assets after liabilities are subtracted, indicating the stake held by shareholders.