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Genius Professor Mullen Co. is using the Target Cost approach on a new product. Information gathered so far reveals: Expected annual sales (Market Sales) 400,000 units Desired profit per unit (DP) $0.25 Target cost (TC) $168,000 What is the Market Price (MP) per unit

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Answer: $0.67 per unit

Explanation:

Find the target cost per unit:

= 168,000 / 400,000

= $0.42 per unit

If the desired profit is $0.25 and the target cost is $0.42, the market price per unit is:

= Desired profit + Target cost

= 0.25 + 0.42

= $0.67 per unit

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