Target profit product pricing Jimmy took a woodworking course as a senior in high school and decided to spend the summer after graduation making wooden hobbyhorses in order to earn some money for college expenses. He expected to be able to make 50 horses per month and to earn at least $600 per month. By the end of the first month of summer he had built 40 horses and decided that it was not possible to do more in 1 month. But all 40 horses sold easily at $30 each, and Jimmy had a waiting list of customers. However, he felt that for a month's work he had not earned very much money, so he went through his receipts of materials, accumulated some data, and made some time estimates to come up with the following figures:

Jimmy estimates that of the materials purchased he had used % for the horses sold and still had Vs left for future production.

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Cost of lumber... Paint.... Glue, screws, and miscellaneous Cost of tools and equipment Expected useful life .... $ 615 480 240 1,800 5 years