Compute the target cost of one battery

Reference no: EM13903491

Target Costing: Eastern Auto Supply, Inc., produces and distributes auto supplies. The company is anxious to enter the rapidly growing market for long-life batteries that is based on lithium technology. Management believes that to be fully competitive, the price of the new battery that the company is developing cannot exceed $65. At this price, management is confident that the company can sell 50,000 batteries per year. The batteries would require an investment of $2,500,000, and the desired ROI is 20%.

Required:

Compute the target cost of one battery.

Reference no: EM13903491

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