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Selera Pastry plans to make and market its new steam cake, Sedap. The company decides to sell at the price of RM120 per box. The expected annual sales are 4,500 boxes. As a start, a capital of RM600,000 is needed to make and market them. The management requires a 30% return on the investment.
Problem a) Discuss the important factors that need to be considered by the management of Selera Pastry in its pricing decision.
Problem b) Based on the above information, determine the total target costs and the target cost per unit of Sedap.
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