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Problem statement: Assume that Joe's fishery is considering introducing an enhanced version of the Brown product that is expected to cost $180 per unit to produce. Joe's Fishery uses target costing to set its cost reduction goals. A recent market study revealed that 300,000 customers would be willing to pay $220 for the Brown product over the product's 3-year life cycle. Joe's Fishery stockholders require a 30% return on sales.

a) What is the target cost per unit?

b) What is the total cost reduction target for the next three years?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M938147

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