If the unit cost is $30, the desired return is 75%, invested capital is $60,000 and 20,000 units are sold, what is the target-return price?
Correct answer C. $32.25
Explanation
Target-return price equals unit cost plus (return times capital) divided by unit sales: $30 plus $45,000 divided by 20,000 ($2.25), giving $32.25.
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