Utah Utensil has developed a new kitchen utensil.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

Utah Utensil has developed a new kitchen utensil.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

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?


Price: £ 45

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