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 $w$

need to be $$24,400.$ Assume further that the QuikCar's total unit cost for the upcoming

model year is estimated to be $$19,700$ 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?

$

b$.$ Since the estimated manufacturing cost exceeds $$ the target cost, Toyota

its total costs to maintain competitive pricing within its profit

objectives.