Perin Corporation Would Like to Use Target Costing for a New

question 9

Multiple Choice

Perin Corporation would like to use target costing for a new product it is considering introducing. At a selling price of $25 per unit, management projects sales of 30,000 units. The new product would require an investment of $500,000. The desired return on investment is 11%. The target cost per unit is closest to:

• A)$23.17
• B)$25.00
• C)$25.72
• D)$27.75

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Definitions:

FTC's Shelter Provision

A regulation by the Federal Trade Commission providing certain protections to consumers against debt collection practices.

Real Defenses

Legitimate legal defenses that can be used to nullify a contract or claim, regardless of its apparent validity.

Lack of Consideration

A situation in contract law where there is an absence of a promise, act, or value exchange, rendering the contract unenforceable.

Fraud in the Inducement

A type of fraud involving false representations that lead another to enter into an agreement or transaction.