Jarlsberg Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its catalog, which it issues monthly. Given market research, Jarlsberg believes that it can charge $20 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $22. By using cheaper materials and gaining efficiencies in mass production, Jarlsberg believes it can reduce Slim Slicer’s cost substantially. Jarlsberg wishes to earn a return of 30% of the selling price.

Instructions
(a) Compute the target cost for the Slim Slicer.
(b) When is target costing particularly helpful in deciding whether to produce a given product?