Cullumber Designs makes various accessories for pets. Their trademark product, PetBed, is perceived to be high quality but not extravagant, and is sold in a variety of pet stores. Debra King, marketing manager, has convinced her boss that they are missing an important segment of the market. We can increase the quality of the material and design and market PetBed to a higher-end clientele, Debra claims. We wont compete with our existing product. Its win-win! PetBeds sell for $180 each. Debra estimates the gross margin at $60. After working with production engineers and the marketing research team, Debra has designed a bed that she believes the new market segment will purchase $450 for. The production engineers and accountants believe it will cost about $180 to make.

If Cullumber Designs uses cost-plus pricing and prices most products like the original PetBed, what should be the price of the high-end PetBed? (Its 270)

*If Cullumber Designs wants to preserve the existing gross margin percentage, what is the target cost at a market price of $204?*