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Target Profit Price = total costs [at Level X] + Target profit

Target Profit Price = total costs [at Level X] + Target profit number of units [at Level X]. So in the case of our business lady who said X = 100 and Target profit was $5 000. [Total costs = Fixed costs + Total Variable costs]

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Target Profit Price = total costs [at Level X] + Target profit

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  1. Target Profit Price = total costs [at Level X] + Target profit number of units [at Level X] So in the case of our business lady who said X = 100 and Target profit was $5 000. [Total costs = Fixed costs + Total Variable costs] and Total Variable Cost = Variable Cost Per Unit x Number Of Units = $10 000 + [$20 x 100] I just invented the Fixed Costs and Variable Cots per unit = $12 000 $12 000 + $5 000 = $170 100 The lady must charge of price of $170 if she can only make 100 units and wants to earn $5 000 profit.

  2. ANOTHER EXAMPLE

  3. I know how much profit I want to make ( I have a holiday planned!) I know how much supplies I can get so I know how many cupboards I wish to make B A Now I want to know what price I should charge for each cupboard? C Target Profit price [C] = total costs [at Level A] + Target profit of B number of units [ie A]

  4. A = 25 cupboards B = $5000 TFC = $1000 & AVC = $100 P = ? P = ($1000 + [$100 x 25]) + $5000 25 P = $340

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