Majesty Company uses target costing to ensure that its products are profitable. Assume Majesty is planning to introduce a new product with the following estimates:

Required:
1. Compute the target cost of this product.
2. Compute the target cost if Majesty wants a 40 percent return on sales.
3. Compute the target cost if Majesty wants a 15 percent return onsales.

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Estimated market price Annual demand Life cycle Target profit $1,200 100,000 units 5 years 30% return on sales