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What is the target cost for the new widget

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Question - Summit Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $90 for such a widget and that 50,000 units could be sold each year at this price. The current cost to produce the widget is estimated to be $65.

If Summit Products requires a 25% return on sales to undertake production, what is the target cost for the new widget?

a. $81.25

b. $65.00

c. $67.50

d. $80.00

Reference no: EM132517429

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