1 The market price for a product has been $50 per unit, but competitive pressures have reduced the market price to $45. The firm manufactures 10,000 of these products per year at a manufacturing cost of $38 per unit (including $22 fixed cost and $16 variable cost per unit). Other selling and administrative costs for the product are $8 per unit. What is the firm's target cost for this product?
2. The firm in 1 above ignores competitive prices because it has a differentiated product. It uses full-cost-based pricing with a 40 percent markup. What is the firm's price?