Mojave Corporation Manufactures a Single Product That Has a Cost

question 37

Multiple Choice

Mojave Corporation manufactures a single product that has a cost of $350. The company uses a 70% markup on cost to arrive at a selling price of $595, which results in a price that virtually always exceeds that of the market leaders. If Mojave changes to the approach known as target costing, the company will first:

• A) reduce its 70% markup rate.
• B) trim its $350 cost.
• C) attempt to re-engineer its product.
• D) undertake a thorough study of competitors' prices.
• E) change the markup so that it is based on sales rather than based on cost.

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