The Caplow Company, a chair manufacturing shop decides to use target profit pricing to establish a price for a chair. The variable cost for each chair is $25. Fixed costs for the company is $50,000. What price should the company set, if they target a 20% return on sales for 10,000 units?

The Caplow Company, a chair manufacturing shop decides to use target profit pricing to establish a price for a chair. The variable cost for each chair is $25. Fixed costs for the company is $50,000. What price should the company set, if they target a 20% return on sales for 10,000 units?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8E

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The Caplow Company, a chair manufacturing shop decides to use target profit pricing to
establish a price for a chair. The variable cost for each chair is $25. Fixed costs for the company is $50,000. What price should the company set, if they target a 20% return on sales for 10,000 units?

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