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Does the determined cost compare favorably with a cost

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1. Analyze the following hypothetical situation and answer the required questions: XYZ Company wishes to invest $ 2,000,000 for the design, development and production of a new blender model. Accountants determine that the price cannot exceed $ 30 / unit, which is the competitive price in the market. The company wants to generate a 15% minimum profit on the sale of this product and estimates that it will sell 40,000 units in the year.

2. Determine the target cost per unit using the data presented.

3. Does the determined cost compare favorably with a cost that is determined based on 130% of the variable cost per unit, which is currently $ 18?

4. Is the cost efficient based on 130% of the variable cost per unit? Justify your position.

Reference no: EM133071725

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