Sissy Products currently sells purses for \($250.\) Costs of \($180\) are currently assigned to each handmade purse. The company is introducing a new purse that will be similar in design but they want to price it at \($200\) per purse. They want to achieve a 25% mark-up on the selling price. The \($180\) cost for the current purse is made up of

• \($50\) for direct materials (the company can reduce this to \($40\) if it chooses a lower-cost supplier)

• \($100\) for direct labour for 4 labour hours per purse (if the company redesigns the purse, it can reduce the hours to 2.5 hours per purse)

• \($30\) for overhead (assigned as 30% of direct labour cost)

If the company makes the above changes to design and costs, what will be the target cost for the new purse?

a. $121.25

b. $180

c. $142.50

d. $132.50