# Investment and Selling Price

27. Straus Company, a manufacturer of electronic products, wants to introduce a new calculator. To compete effectively, the calculator could not be priced at more than $40. The company requires a 20% rate of return on investment on all new products. In order to produce and sell 30,000 calculators each year, the company would have to make an investment of $850,000. The target cost per calculator would be: A. $16.50

B. $23.50

C. $28.33

D. $34.33

29. Hostetter Corporation would like to use target costing for a new product it is considering introducing. At a selling price of $30 per unit, management projects sales of 30,000 units. The new product would require an investment of $200,000. The desired return on investment is 13%. The target cost per unit is closest to: A. $32.92

B. $30.00

C. $33.90

D. $29.13

Hauber Corporation would like to use target costing for a new product it is considering introducing. At a selling price of $26 per unit, management projects sales of 60,000 units. The new product would require an investment of $300,000. The desired return on investment is 20%.

47. The desired profit according to the target costing calculations is: A. $312,000

B. $60,000

C. $1,560,000

D. $1,500,000

48. The target cost per unit is closest to:

A. $26.00

B. $31.20

C. $30.00

D. $25.00

59. Turnhilm, Inc. is considering adding a small electric mower to its product line. Management believes that in order to be competitive, the mower cannot be priced above $139. The company requires a minimum return of 25% on its investments. Launching the new product would require an investment of $8,000,000. Sales are expected to be 40,000 units of the mower per year.

Required:

Compute the target cost of a mower.

57. The management of Hettler Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. The company's accounting department has supplied the...

Please join StudyMode to read the full document