18. Target believes it can sell 3,500,000 of a new vehicle charger for $8 each.

Question

18.

Target believes it can sell 3,500,000 of a new vehicle charger for $8 each. There will be $3,000,000 in fixed costs associated with the charger. If the company desires to make a profit of $2,000,000 on the charger, what is the target variable cost per charger?

A)

$7.25

B)

$9.00

C)

$6.57

D)

$9.40

18.

Target believes it can sell 3,500,000 of a new vehicle charger for $8 each. There will be $3,000,000 in fixed costs associated with the charger. If the company desires to make a profit of $2,000,000 on the charger, what is the target variable cost per charger?

A)

$7.25

B)

$9.00

C)

$6.57

D)

$9.40

Explanation / Answer

Total variable cost = (3500000)*8-2000000-3000000

=$23000000

Variable cost per unit = 23000000/3500000

=$6.57

Hence, option (C), is the correct answer

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