Exercise 8-1 Mesa Cheese Company has developed a new cheese slicer called Slim S

Question

Exercise 8-1 Mesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its catalog, which it issues monthly. Given market research, Mesa believes that it can charge $20 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $22. By using cheaper materials and gaining efficiencies in mass production, Mesa believes it can reduce Slim Slicer's cost substantially. Mesa wishes to earn a return of 40% of the selling price. (a) Compute the target cost for the Slim Slicer. (Round answer to 2 decimal places, e.g. 10.50.)

Explanation / Answer

Target Sales Price 20 Less: Gross Mark up 20*40% 8 Target Cost 12

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