=+EX 25-17 Variable cost concept of product pricing obj. 2

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b. 32.5%

Toyota Motor Corporation uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be $22,000. Assume further that the Camry’s total unit cost for the upcoming model year is estimated to be $18,100 and that Toyota requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost).