Ummit Products Inc is interested in producing and selling an improved widget Market research indicates that

Question

ummit Products, Inc. is interested in producing and selling an improved widget. Market research indicates that

customers would be willing to pay $78 for such a widget and that 38,000 units could be sold each year at this price. The current cost to produce the widget is estimated to be $52.

Summit has learned that a competitor plans to introduce a similar widget at a price of $68. In response, Summit may reduce its selling price to $68. If Summit requires a 25% return on sales, what is the target cost for the new widget?

Business