If the unit cost is $30, desired return on sales is 75%, invested capital $60000 and units sold are 20000 then target return price is __________?
Correct answer: D. $32.25
- A. $45.25
- B. $40.25
- C. $36.25
- D. $32.25
Explanation
Using target-return pricing, add the desired return on invested capital per unit to unit cost: $30 + (0.75 × $60,000 ÷ 20,000) = $32.25. The wording says return on sales, but the figures and options clearly apply the standard return-on-investment formula.
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