Posted: May 17th, 2017

Summit Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $90 for such a widget and that 50,000 units could be sold each year at this price.

Summit Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $90 for such a widget and that 50,000 units could be sold each year at this price. The current cost to produce the widget is estimated to be $65.
40.
8. Refer to the information above. If Summit Products requires a 25% return on sales to undertake production, what is the target cost for the new widget?

A. $65.00.

B. $67.50.

C. $80.00.

D. Some other amount.
90 x .25= 22.5
90-22.5= 67.50