Classic Toys has examined the market for toy train locomotives. It believes there is a market niche in which it can sell locomotives at $80 each. It estimates that it could sell 10,000 of these locomotives annually.

Variable costs to make a locomotive are expected to be $25. Classic anticipates a profit of $15 per locomotive.

The target cost for the locomotive is:

(a) $80. 

(b) $65. 

(c) $40.

(d) $25.