Aldot Candy Corporation Is Implementing a Target Costing Approach for Its

question 25

Multiple Choice

Aldot Candy Corporation is implementing a target costing approach for its latest new product, the "Big Glob" candy bar. The following information relates to the Big Glob: $\begin{array}{lr}\text { Target cost per candy bar}&\$ 0.40 \\\text { Expected annual sales (in units) of candy bars }&500,000 \\\text {Required investment in additional assets }&\$ 600,000 \\\text { Desired return on investment}&20 \%\end{array}$ Based on this information, what is Aldot's target selling price per bar for the Big Glob?

• A)$0.48
• B)$0.50
• C)$0.64
• D)$0.70

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Definitions:

Accounting

The systematic process of recording, summarizing, and reporting the financial transactions and positions of a company.

Available-for-sale

This is a classification for investments that a company plans to sell but are not actively traded, with changes in value reported in other comprehensive income.

Unrealized Gain

A profit that has occurred on paper due to an investment's increased value but has not yet been realized through a sale.

Market Value

The estimated worth or price at which an asset would trade in a competitive auction setting.