Summit Products, Inc. is interested in producing and selling an improved widget.

Question

Summit Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $84 for such a widget and that 44,000 units could be sold each year at this price. The current cost to produce the widget is estimated to be $54

Summit Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $84 for such a widget and that 44,000 units could be sold each year at this price. The current cost to produce the widget is estimated to be $54

Explanation / Answer

The answer is $67.20

Target cost= Target sales price - desired profit

Target cost= $84 - ($84 x 20%)

Target cost= $84 - 16.8

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