Baldwin produces bicycles in a highly competitive market. During the past year, the company has added a 20% markup on the $300 manufacturing cost for one of its most popular models. A new competitor recently entered the market with a competitive model that is priced at $320, seriously eroding Baldwin's market share. Management now desires to use a target-costing approach to remain competitive and is willing to accept a 20% return on sales. If target costing is used, which of the following choices correctly denotes (1) Baldwin's selling price and (2) Baldwin's target cost?

	Selling Price				Target Cost
A)	$	360			$	288
B)	$	360			$	256
C)	$	320			$	256
D)	$	320			$	288
E)	None of these answer choices is correct.

Multiple Choice

• Option B

• Option D

• Option C

• Option A

• Option E