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Mesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to...

Mesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its catalog, which it issues monthly. Given market research, Mesa believes that it can charge $22 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $27. By using cheaper materials and gaining efficiencies in mass production, Mesa believes it can reduce Slim Slicer's cost substantially. Mesa wishes to earn a return of 35% of the selling price.



Compute the target cost for the Slim Slicer. (Round answer to 2 decimal places, e.g. 10.50.)

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Answer #1

Target sales price = Target cost + Markup

Target cost = Target sales price - Markup

= 22 - (22*35%)

= 22 - 7.70

= 14.30
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