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Author Question: Marcon Tech Corp., currently sells radios for $7,000. It has costs of $5,400. A competitor is ... (Read 99 times)

shofmannx20

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on: Mar 6, 2021
Marcon Tech Corp., currently sells radios for $7,000. It has costs of $5,400. A competitor is bringing a new radio to market that will sell for $6,850. Management believes it must lower the price to $6,850 to compete in the market for radios. The marketing department believes that the new price will cause sales to increase by 10%, even with a new competitor in the market. Marcon's sales are currently 1,000 radios per year. 

Required: 
a. What is the target cost for the new target price if target operating income is 20% of sales?
b. What is the change in operating income if marketing department is correct and only the sales price is changed?
c. What is the target cost if the company wants to maintain its same income level, and marketing department is correct in its estimation?
Horngren's Cost Accounting: A Managerial Emphasis ¦ Datar, Rajan ¦ 16th Edition
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Marked as best answer by shofmannx20 on Mar 6, 2021

missalyssa26

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Reply #1 on: Mar 6, 2021
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shofmannx20

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Reply 2 on: Mar 6, 2021
Great answer, keep it coming :)

rachel

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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