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Target Costing

1. Banks Company would like to design, produce, and sell versatile toasters for the home kitchen market. The toaster will have four slots that adjust in thickness to accommodate both slim slices of bread and oversized bagels. The target price is $65. Banks requires that new products be priced such that 20% of the price is profit.

Required:

If required, round your answers to two decimal places.

a. Calculate the amount of desired profit per unit of the new toaster. $______

b. Calculate the target cost per unit of the new toaster. $ ______

Calculating Price Using a Markup Percentage of Cost

2. Lake McDonald Gift Shop has decided to price the games that it sells at cost plus 80%. The National Parks Memory Card Game costs $15.00 each, and another one, the Guess This Animal Track Game, costs $5.00 each.

Required:

b. What price will Lake McDonald Gift Shop charge for each National Parks Memory Card Game? If required, round your answer to two decimal places. $____

a. What price will Lake McDonald Gift Shop charge for each Guess This Animal Track Game? If required, round your answer to two decimal places. $_______