CALCULATING A TARGET COST 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 $350. Management requires a 10 percent profit on new products.

Required:

. Calculate the amount of desired profit.

. Calculate the target cost.

Exercise