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Compute the target cost of a cd player

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Loyola International, Inc. is considering adding a portable CD player to its product line. Management believes that in order to be competitive, the CD player cannot be priced above $79. The company requires a minimum return of 18% on its investments. Launching the new product would require an investment of $22,000,000. Sales are expected to be 230,000 units of the CD player per year. Variable selling costs are 1% of sales.


Required:
Compute the target cost of a CD player.

Reference no: EM13116379

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