Basic Motor Corporation uses target costing. Assume that Basic marketing personnel estimate that the competitive selling price for the QuikCar in the upcoming model year will need to be $23,700. Assume further that the QuikCar's total unit cost for the upcoming model year is estimated to be $19,100 and that Basic requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost).

a. What price will Basic establish for the QuikCar for the upcoming model year? $fill in the blank 1

b. Since the estimated manufacturing cost

exceedsis less thanexceeds

the target cost, Basic

may increasemust reducemust reduce

its total costs to maintain competitive pricing within its profit objectives.