D is corrent. The requirement is to compute the selling price of a product that costs $89 to produce, designed to achieve a 40% profit margin. If the company’s target gross margin is 40%, the cost of the product represents 60% (100% - 40%) of the selling price. The selling price is equal to $148.33 ($89 / 60%).
A is incorrect. Selling price is equal to cost to produce divided by the cost percentage.
A is incorrect. Selling price is equal to cost to produce divided by the cost percentage.
C is incorrect. Selling price is equal to cost to produce divided by the cost percentage.
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