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 $59. Ortega would like a profit of $5 per drive. What target cost Ortega should set to accomplish this objective

Answer 1

$54

Explanation:

Relevant data provided as per the question is shown below:

Market price = $59

Required profit = $5

According to the given situation, The computation of target cost is shown below:-

Target Cost = Market price - Required Profit

= $59 - $5

= $54

Therefore for computing the target cost we simply applied the above formula.