Question

Bouchard Company manufactures a product that currently has a full cost of $ 200. Its target operating income per unit is $ 40 and​ management's budgets assume that same target operating income per unit for the foreseeable future. To stay​ competitive, Bouchard management believes it must cut its price by 25​%. What will be its new target​ price?

Answer 1

Answer:

New target​ price is $ 180.

Explanation:

This question requires us to calculate the new target price. The detail calculation is given below.

Current price = Full cost + target income

Current price = $ 200 + $ 40

Current price = $ 240-A

New Price = A * (75%)

New price = $ 180

(new price is 75% of current price)