Utah Utensil has developed a new kitchen utensil. The firm has conducted significant market research…


Question Description:

33

Target Costing Utah Utensil has developed a new kitchen utensil. The firm has conducted significant market research and estimated the following pattern for sales of the new product: Year Expected Volume (units) Expected Price per unit 1 48,000 19 2 48,000 20 3 90,000 16 4 40,000 12 If the firm desires to net $3.50 per unit in profit over the life of the product, and selling and administrative expenses are expected to average $50,000 per year, what is the target cost to produce the new utensil?

Answer

33