Question - (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 Expected Price per Unit
48,000 units$19
48,000 units$20
90,000 units$16
40,000 units$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?