Askew Enterprises produces a product with fixed costs of $200,000 and variable cost of $9 per unit.

Question:

Askew Enterprises produces a product with fixed costs of $200,000 and variable cost of $9 per unit.
The company desires to earn a $100,000 profit and believes it can sell 20,000 units of the product.
Required
a. Based on this information, determine the target sales price.
b. Assume a competitor is currently selling a similar product for $20 per unit. Explain how Askew can use target costing to maintain its desired profitability.