Basic Motor Corporation uses target costing. Assume that Basic marketing personnel estimate that the competitive selling price for the QuikCar in the upcoming model year will need to be $$23,500.$ Assume further that the QuikCar's total unit cost for the upcoming model year is estimated to be $$20,000$ and that Basic requires a $20\%$ profit margin on selling price $($which is equivalent to a $25\%$ markup on total cost$).$

a$.$ What price will Basic establish for the QuikCar for the upcoming model year?

fill in the blank $1$ of $1$$

b$.$ Since the estimated manufacturing cost

exceeds

the target cost, Toyota

must reduce

its total costs to maintain competitive pricing within its profit objectives.

Answer rating: 100% (QA)

a Price can be computed as Cost Cost Markup percentage on Total Cost Subst... View the full answer