Marcon Tech Corp

question 39

Essay

Marcon Tech Corp., currently sells radios for $7,000. It has costs of $5,400. A competitor is bringing a new radio to market that will sell for $6,850. Management believes it must lower the price to $6,850 to compete in the market for radios. The marketing department believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Marcon's sales are currently 1,000 radios per year.
Required:
a. What is the target cost for the new target price if target operating income is 20% of sales?
b. What is the change in operating income if marketing department is correct and only the sales price is changed?
c. What is the target cost if the company wants to maintain its same income level, and marketing department is correct in its estimation?

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Definitions:

Connectives

Logical operators used in sentences to connect propositions or statements, indicating relationships like conjunction, disjunction, or implication.

Main Connective

The primary logical operator in a compound statement or proposition that determines the overall truth value of the statement based on its components.

Symbolic Notation

The use of symbols or abbreviations to represent specific objects, operations, or quantities in various fields, including mathematics, physics, and chemistry.

Atomic Components

The simplest parts or elements of something that cannot be divided further without losing its essential properties.