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What is the target cost for the new widget

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Reference no: EM132680650

Summit products, inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $110 for such a widget and that 68,000 units could be sold each year at this price. The current cost to produce the widget is estimated to be $62.

Problem 1: If summit products requires a 25% return on sales to undertake production, what is the target cost for the new widget?

a) $85.00
b) $82.50
c) $94.50
d) $27.50

Reference no: EM132680650

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