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Compute the target cost of this product

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Question - Majesty Company uses target costing to ensure that its products are profitable. Assume Majesty is planning to introduce a new product with the following estimates:

Estimated market price $2,900

Annual demand 84,000 units

Life cycle 7 years

Target profit 28 % return on sales

Required -

1. Compute the target cost of this product.

2. Compute the target cost if Majesty wants a 36 percent return on sales.

3. Compute the target cost if Majesty wants a 7 percent return on sales.

Reference no: EM133139340

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