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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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