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What impact will target costing have on Toyota

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Reference no: EM132767660

Problem - Target costing - Toyota Motor Corporation (TM) uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be $27,000. Assume further that the Camry's total unit cost for the upcoming model year is estimated to be $22,500 and that Toyota requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost).

Required -

a. What price will Toyota establish for the Camry for the upcoming model year?

b. What impact will target costing have on Toyota, given the assumed information?

Reference no: EM132767660

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