Slovenia Corporation manufactures a product that is marketed in North America, Europe, and Asia. Its total manufacturing cost to produce 100 units of product X is 2,250, detailed as follows:
Raw materials ....... €500
Direct labor ........ 1,000
Overhead ......... 750
Total .......... €2,250
The company bases its selling price on a cost-plus formula.

Required:
a. What would be Slovenia Corporation’s selling price per unit if it wants a gross profit of 10 percent above cost?
b. Slovenia Corporation wants to be price competitive on an international basis. To accomplish this it must be able to price its product no higher than $21.50. Using the target costing methodology described in this chapter, what would be Slovenia Corporation’s allowable costs? Assume that the company still wants a profit margin of 10 percent of its allowable costs. What does your calculation imply about its manufacturing costs?