Question

Sve cusung particularly helpful in deciding whether to produce a given product? Compute targe 1.0.2 (LO 1), AP Eckert Company is involved in producing and selling high-end golf equipment. The company has recently been involved in developing various types of laser guns to measure yardages on the golf course. One small laser gun, called LittleLaser, appears to have a very large potential market. Because of competition, Eckert does not believe that it can charge more than $90 for Little Laser. At this price, Eckert believes it can sell 100,000 of these laser guns. Eckert will require an investment of $8,000,000 to manufacture, and the company wants an ROI of 20%. Instructions Determine the target cost for one LittleLaser. Comp E83 (LO 1, 2), AP Leno Company makes swimsuits and sells these suits directly to retailers. Although Leno has a variety of suits, it does not make the All-Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicate L 11n1

just E.82

Answer 1

Investment required	8000000
Return on Investment reqd. By Eckert Co.	20%*8000000=
(ie. Net income reqd.)	1600000
Maximum sales $ possible	100000*90=	9000000
Less: Return on Investment reqd. By Eckert Co.(as calculated above)		1600000
So,total cost planned		7400000
No.of LittleLaser guns planned to be sold		100000
So,Target cost for 1 LittleLaser=	7400000/100000=	74
Answer:
Target cost for 1 LittleLaser= $ 74