Questions: Nourishmix, Inc. manufactures food processors. The target sales price is 460 per unit. The company desires a 30% net profit margin on its products. What is the company's target full - product cost per unit using target pricing? A. 598 B. 322 C. 782 D. 138

Solution Steps

To find the company's target full-product cost per unit using target pricing, we need to determine the cost that allows the company to achieve a 30% net profit margin on a sales price of $460. The net profit margin is calculated as the difference between the sales price and the cost, divided by the sales price. We can rearrange this formula to solve for the cost.

The net profit margin is defined as:

\[ \text{Profit Margin} = \frac{\text{Sales Price} - \text{Cost}}{\text{Sales Price}} \]

Given that the desired profit margin is \(30\%\) or \(0.30\), we can express this as:

\[ 0.30 = \frac{460 - \text{Cost}}{460} \]

To find the target cost, we rearrange the equation:

\[ 460 - \text{Cost} = 0.30 \times 460 \]

Calculating \(0.30 \times 460\):

\[ 0.30 \times 460 = 138 \]

Thus, we have:

\[ 460 - \text{Cost} = 138 \]

Now, we can solve for the cost:

\[ \text{Cost} = 460 - 138 = 322 \]

Final Answer