Target Costing and Pricing Sid’s Skins makes a variety of covers for electronic organizers and portable music players. The company’s designers have discovered a market for a new clear plastic covering with college logos for a popular music player. Market research indicates that a cover like this would sell well in the market priced at $21. Sid desires an operating profi t of 20 percent of costs. Required :What is the highest acceptable manufacturing cost for which Sid’s would be willing to produce the cover?

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 7E: Make-or-buy decision Somerset Computer Company has been purchasing carrying cases for its portable...
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Target Costing and Pricing Sid’s Skins makes a variety of covers for electronic organizers and portable music players. The company’s designers have discovered a market for a new clear plastic covering with college logos for a popular music player. Market research indicates that a cover like this would sell well in the market priced at $21. Sid desires an operating profi t of 20 percent of costs. Required :What is the highest acceptable manufacturing cost for which Sid’s would be willing to produce the cover?
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