Question

Ortega Company manufactures computer hard drives. The market for hard drives is very competitive. The current market price for a computer hard drive is $76. Ortega would like a profit of $13 per drive. What target cost Ortega should set to accomplish this objective?

Answer 1

The correct answer is $63.

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

So, we can calculate the target cost to accomplish the objective by using following formula:

Target cost = Market price - Profit

Where, Market price = $76

Profit = $13

By putting the value in the formula, we get

Target cost = $76 - $13

= $63