Toledo Enterprises produces a product with fixed costs of $160,000 and variable cost of $7.50per unit. The

Question:

Toledo Enterprises produces a product with fixed costs of $160,000 and variable cost of $7.50 per unit. The company desires to earn a $80,000 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 $18.50 per unit. Explain how Toledo can use target costing to maintain its desired profitability.