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Shimada Products Corporation of Japan is anxious to enter the electronic calculator market. Management believes that in order to be competitive in world markets, the price of the electronic calculator that the company is developing cannot exceed $65. Shimada's required rate of return is 21% on all investments. An investment of $3,500,000 would be required to purchase the equipment needed to produce the 48,000 calculators that management believes can be sold each year at the $65 price. Required: Compute the target cost of one calculator.

Shimada Products Corporation of Japan is anxious to enter the electronic calculator market. Management believes that in order to be competitive in world markets, the price of the electronic calculator that the company is developing cannot exceed $65. Shimada's required rate of return is 21% on all investments. An investment of $3,500,000 would be required to purchase the equipment needed to produce the 48,000 calculators that management believes can be sold each year at the $65 price. Required: Compute the target cost of one calculator.

FINANCIAL ACCOUNTING
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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Shimada Products Corporation of Japan is anxious to enter the electronic calculator market. Management believes that in order to be competitive in world markets, the price of the electronic calculator that the company is developing cannot exceed $65. Shimada's required rate of return is 21% on all investments. An investment of $3,500,000 would be required to purchase the equipment needed to produce the 48,000 calculators that management believes can be sold each year at the $65 price. Required: Compute the target cost of one calculator.
Transcribed Image Text:Shimada Products Corporation of Japan is anxious to enter the electronic calculator market. Management believes that in order to be competitive in world markets, the price of the electronic calculator that the company is developing cannot exceed $65. Shimada's required rate of return is 21% on all investments. An investment of $3,500,000 would be required to purchase the equipment needed to produce the 48,000 calculators that management believes can be sold each year at the $65 price. Required: Compute the target cost of one calculator.
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