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What is the target cost for the new widget

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Summit Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $78 for such a widget and that 38,000 units could be sold each year at this price. The current cost to produce the widget is estimated to be $52.

Summit has learned that a competitor plans to introduce a similar widget at a price of $68. In response, Summit may reduce its selling price to $68. If Summit requires a 25% return on sales, what is the target cost for the new widget?

Reference no: EM132327112

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