Shimada roducts Cor orat on of Japan is anxious to on ar cioc on c calculator ma

Question

Shimada roducts Cor orat on of Japan is anxious to on ar cioc on c calculator market. Mana oment beleves at n order to be compet tive in world markets to price o the electronic ca culator that t e company is develop n investments. An investment of $3.000,000 would be required to purchase the equipment needed to produce the 57.000 calculators that management believes can be sold each year at the $74 price n oemarn d oa not e ceed S74 574 Shimada's required rale of return is 20% on ai hi ada'a equired n e o rot m s 29% on a Required Compute the target cost cf one calculator. Leas desired oet cost for Targot coat per unit

Explanation / Answer

Particulars Amt Total Sales (57000 x 74)    4,218,000.00 Less: Rquired Return        (3000000 x 28%)        840,000.00 Total Target Cost    3,378,000.00 No of Units          57,000.00 Per Unit Target Cost                  59.26

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