Ferrero Corp Requirement: Determine If Ferrero's Current Full-Product Costs Meet Its Target

Essay

Ferrero Corp.manufactures gourmet dips along with potato chips flavored with Cajun spices.The market price for similar chips is $7.The management of the company desires a 30% net profit margin.
The current costing data relating to this product are as follows.
$\begin{array}{ll}\text { Direct materials } & \$ 1.00 \\\text { Direct labor } & 1.50 \\\text { Manufacturing overhead } & 2.75 \\\text { Nonmanufacturing costs } & 0.75\end{array}$ Requirement: Determine if Ferrero's current full-product costs meet its target cost.