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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Mathematical Tasks

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