Question

Yuhu manufactures cell phones and is developing a new model with a feature (aptly named Don't Drink and Dial) that prevents the phone from dialing an owner-defined list of phone numbers between the hours of midnight and 6:00 A.M. The new phone model has a target price of $380. Management requires a 25% profit on new product revenues.

Required:
a. Calculate the amount of desired profit.
b. Calculate the target cost.

Answer 1

1. $95

2. $285

Step-by-step explanation:

1) Calculate the desire profit of the company

25% profit on Product revenue

Desired Profit=Target price*25%

=380 * 0.25

= $95

The desire profit of the company is $95

2) Calculate the target cost

Total Sales Price $380

Less: Desired profit ($95)

Target cost $285