Answer:
Option C-$172.50
Option C,($190,000)is correct
Explanation:
Target cost=competitive market price-target operating profit
competitive market price is $230
target operating profit is 25% of selling price=$230*25%=$57.50
target cost=$230-$57.50=$172.50
Option C is correct as a result of the above computation
Current operating income =($270-$210)*5000=$300,000
new operating income=($230-$210)*(5000*110%)
=$20*5500=$110,000
The new operating is $110,000 from $300,000 recorded earlier,in a nutshell ,the operating income would reduce by $190,000($300,000-$110,000)
Option C is the correct answer
