EXERCISE A-3 Target Costing [LO3] Shimada Products Corporation of Japan is anxious to enter the electronic calculator market. Man- agement believes that in order to be competitive in world markets, the price of the electronic calcu- lator that the company is developing cannot exceed $15. Shimada's required rate of return is 12% on all investments. An investment of $5,000,000 would be required to purchase the equipment needed to produce the 300,000 calculators that management believes can be sold each year at the $15 price. Required: Compute the target cost of one calculator.

EXERCISE A-3 Target Costing [LO3] Shimada Products Corporation of Japan is anxious to enter the electronic calculator market. Man- agement believes that in order to be competitive in world markets, the price of the electronic calcu- lator that the company is developing cannot exceed $15. Shimada's required rate of return is 12% on all investments. An investment of $5,000,000 would be required to purchase the equipment needed to produce the 300,000 calculators that management believes can be sold each year at the $15 price. Required: Compute the target cost of one calculator.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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