Sail Safe currently sells motor boats for $ It has costs of $ A competitor is bringing a new motor boat to the market that will sell for $ Management believes it must lower the price to $ to compete in the market for motor boats. The marketing department believes that the new price will cause sales to increase by even with a new competitor in the market. Sail Safe\'s sales are currently motor boats per year.

Required:

a What is the target cost for the new target price if target operating income is of sales?

b What is the change in operating income if marketing department is correct and only the sales price is changed?

c What is the target cost if the company wants to maintain its same income level, and marketing department is correct?

Answer rating: 100% (QA)

Sail Safe Motorboat Analysis a Target Cost for New Price and 20 Operating Income 1 Calculate current total revenue Sales price per boat 60000 Current ... View the full answer