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Current manufacturing cost

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Stetson Corporation uses target costing and sells a product for $40 per unit. The company seeks a profit margin equal to 30% of sales. If target-costing calculations revealed a need for a $4 cost reduction, the firm's current manufacturing cost must be:

A. $12
B. $24
C. $28
D. $32
E. an amount other than those listed above

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The solution explains how to calculate the current manufacturing cost under target costing

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