Bookmarks Window Help Help Save & Exit Submis Required information The foWowing

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Bookmarks Window Help Help Save & Exit Submis Required information The foWowing information applies to the questions displayed below) Summit Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be wiling 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. summit Products requires a 25% return on sales to undertake production, what is the target cost for the new widget? Multiple Choice s65.00 O s6750 s000 Keynote MacBook Pro 3 4 5 6 7 8 9 0

Explanation / Answer

Answer : $67.50

=>

selling price = $90 per widget return required = 25% of sales The target return in dollar = $90 * 25% = $22.50 The target cost for the new widget = $90 - $22.50 = $67.50

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