The target unit cost is $231,840
Explanation:
Target Cost = Selling Price – Profit Margin
=$288000-$56160
=$231840
What is the target unit cost?
- Target Cost is the sum of the product's costs after a specified amount of profit is subtracted from the selling price. It can be represented mathematically as the projected selling price minus the desired profit needed to stay in company.
- In this cost category, the business accepts prices rather than setting them for the market. In management accounting, target costing is a helpful technique for managing both product costs and the desired profits needed to sustain a company over the long term.
- Companies can use the approach of "target costing" to plan the costs of their new items before they are produced.
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