**Understanding Target Costing in Competitive Markets****Scenario:**Ortega Company manufactures computer hard drives. The market for hard drives is very competitive. The current market price for a computer hard drive is $54. Ortega would like a profit of $14 per drive. What target cost Ortega should set to accomplish this objective?**Calculation:**To determine the target cost, subtract the desired profit from the market price:\- Market Price: $54 \- Desired Profit: $14 **Target Cost Calculation:**\[ \text{Target Cost} = \text{Market Price} - \text{Desired Profit} \]\[ \text{Target Cost} = $54 - $14 = $40 \]**Answer:****Target Cost: $40 per hard drive**

TARGET COSTINGTarget Costing is a Structured Approach in determining the cost at which proposed…

Answered: Ortega Company manufactures computer…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Ortega Company manufactures computer hard drives. The market for hard drives is very competitive. The current market price for a computer hard drive is $54. Ortega would like a profit of $14 per drive. What target cost Ortega should set to accomplish this objective? Target cost $ per hard drive