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Go-yo Company

Go-yo is a company that designs, manufactures, and markets the world's best competition yo-yos. The company's engineers have designed a new product to be manufactured using a titanium bearing. Such a design will permit the user to accomplish more sophisticated tricks resulting from the yo-yo's ability to "sleep" for longer periods of time.

Market research has determined that customers will pay $225 for such a product. A margin of 30% (based on the selling price) is required.

Questions:

A) Calculate the target cost for Go-yo's new yo-yo.
B) If the estimated cost to product the product exceeds the target cost, what options are available to Go-yo's management?

Please note that I am not looking for just the answer. I want the bottom line of how to calculate it and the reasoning.

Solution Preview

Go-yo is a company that designs, manufactures, and markets the world's best competition yo-yos. The company's engineers have designed a new product to be manufactured using a titanium bearing. Such a design will permit the user to accomplish more sophisticated ...

Solution Summary

The following posting helps with problems involving target cost and estimated cost.

$2.19