Question

ectronic Component Company (ECC) is a producer of high end video and music equipment ECC currently selsits top of the line "ECC video player for a price of $420. It costs ECC $295 to make the pla main competitor is coming to market with a new video player that will sell for a price of $390 ECC feels that it must reduces price to $390 in order to compete. The sales and marketing department of EO educed price will cause sales to increase by 18% ECC currently sells 217.000 video players per year What is the target cost of target profit is 24% of sales and ECC must meet the competitive price of $390? Multiple Choice o o 589 90, o s296, 40 o O S304 65 o ѕо 40

Answer 1

The answer is $296.4.

Please find below working for the answer

	Company Name: ECC
	1. Current Situation				2. Proposed Situation
a	Selling Price	420		a	Selling Price	390
d	No of units	217000		b	No of units (24% of 217000 +217000)	269080
e	Total Sales Value (a*b)	91,140,000.00		c	Total Sales Value (a*b)	104941200
				d	Target profit %	24%
				e	Target profit (d*c)	25,185,888.00
				f	Target cost (c-e)	79,755,312.00
				g	Target cost per unit	296.40