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Question
Arnold Company produces handheld calculators, and their manufacturing cost is currently $5.80 per unit. The company also has non-manufacturing costs of $1.20 per unit. Arnold employs target pricing strategy, and the current market price is $8.00 per unit. If Arnold wishes to price their product at a 25% markup over full-product cost, what must they do?
A) Price the product at $8.75 per unit.
B) Reduce full-product cost by $0.20.
C) Reduce full-product cost by $0.60.
D) Reduce the non-manufacturing cost by 25%.
Answer
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