Asked by Tmobile Oakland on Jul 11, 2024
Verified
Management of Niemczyk Corporation is considering a new product, an outdoor speaker that would have a selling price of $31 per unit and projected sales of 10,000 units. Launching the new product would require an investment of $700,000. The desired return on investment is 16%.Required:Determine the target cost per unit for the outdoor speaker.
Target Costing
A pricing method that involves determining the desired cost for a product to ensure profitability at its anticipated selling price.
Desired Return
The profit or return that an investor or company aims to achieve on an investment or project.
Investment
The dedication of assets to achieve an increase in value over time, including purchases of securities, real estate, and other items with the expectation of generating future income or profit.
- Learn how target costing plays a pivotal role in managing the costs associated with products and in devising effective pricing strategies.
Verified Answer
SY
Sunshine YoungJul 13, 2024
Final Answer : 
Target cost per unit ($198,000 ÷ 10,000 units) = $19.80 per unit
Target cost per unit ($198,000 ÷ 10,000 units) = $19.80 per unit
Learning Objectives
- Learn how target costing plays a pivotal role in managing the costs associated with products and in devising effective pricing strategies.