Pedrotti Corporation Would Like to Use Target Costing for a New

question 5

Multiple Choice

Pedrotti Corporation would like to use target costing for a new product it is considering introducing. At a selling price of $28 per unit, management projects sales of 30,000 units. The new product would require an investment of $300,000. The desired return on investment is 17%. The target cost per unit is closest to:

• A)$32.76
• B)$26.30
• C)$28.00
• D)$30.77

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Definitions:

Quarterly Deposits

Deposits made into an account or investment at regular intervals every three months.

Compounded Semi-Annually

A method of calculating interest in which the accrued interest is added to the principal sum biannually, leading to "interest on interest."

Monthly Payments

Payments made once a month, often as part of a loan or rental agreement.

Borrow

To receive something of value with the promise to return it or its equivalent value at a later date.