Ahlia Company, a nanufacturer of computer games, is in the process of introducing a new game...

 

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Ahlia Company, a nanufacturer of computer games, is in the process of introducing a new game to the narket and has nndertaken market research to find out abont customers' views on the valne of the product, as well as to obtain a conparison with competitors' products. The results of this research have been nsed to establish a target selling price of $80. This is the price that the company thinks it will have to sell the product at to achieve the required sales vohume, Cost estinmates have been prepared based on the proposed product specification. Manufacturing cost 2$ Direct material 4.25 Direct labour 23.08 Direct machinery costs 1.05 Ordering and receiving 0.28 Quality assurance 4.8 Non-manufacturing costs Marketing 8.19 Distribution 3.27 The target profit margin for the game is 45% of the target selling price. Instructions: Calculate the target cost of the new game and the target cost gap. %24 Ahlia Company, a nanufacturer of computer games, is in the process of introducing a new game to the narket and has nndertaken market research to find out abont customers' views on the valne of the product, as well as to obtain a conparison with competitors' products. The results of this research have been nsed to establish a target selling price of $80. This is the price that the company thinks it will have to sell the product at to achieve the required sales vohume, Cost estinmates have been prepared based on the proposed product specification. Manufacturing cost 2$ Direct material 4.25 Direct labour 23.08 Direct machinery costs 1.05 Ordering and receiving 0.28 Quality assurance 4.8 Non-manufacturing costs Marketing 8.19 Distribution 3.27 The target profit margin for the game is 45% of the target selling price. Instructions: Calculate the target cost of the new game and the target cost gap. %24

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Target costing is a method of costing used to set a target cost ... View the full answer