A business is launching a new digital game. The target profit margin is set at 30% of the target selling price. The target selling price is Rs. 10,000. If the expected manufacturing costs are Rs. 3,319 and the expected non-manufacturing costs are Rs. 1,270, what is the target cost gap?

Correct answer: D) Rs. 0 (There is no cost gap)

Explanation

Target Cost = Target Selling Price (10,000) - Target Profit (30% of 10,000 = 3,000) = Rs. 7,000. Total Expected Cost = Manufacturing (3,319) + Non-manufacturing (1,270) = Rs. 4,589. Since the Expected Cost (4,589) is already lower than the Target Cost (7,000), there is no target cost gap. (This uses the cost elements provided in the text).