Reference no: EM132502703

Cann Un Company manufactures scientific calculators. The product life of a calculator is four years. Each model typically offers similar features. Cann Un targets an average profit margin of 10% of its expected revenue over the life cycle. It does not expect its manufacturing cost to vary materially over the four-year life. Estimated volumes and unit price of a particular model over its expected life is given below:

Year                               Volume (units)                   Unit price

Year 1                             30,000                             $85

Year 2                              50,000                          $75

Year 3                                  35,000                      $50

Year 4                                      25,000                  $45

Question 1: Applying the target costing model, the allowable unit cost of the product is:

Group of answer choices

1) $65.53 per unit

2) $150.77 per unit

3) $45.00 per unit

4) $58.98 per unit

5) $63.75 per unit