E4-20 (Algo) Calculating Target Cost [LO 4-8] Majesty Company uses target costing to ensure that its products are profitable. Assume Majesty is planning to introduce a new product with the following estimates: Estimated market price Annual demand Life cycle Target profit Required: $ 2,400 89,000 units 1. Target Cost 2. Target Cost 3. Target Cost 7 years 22 percentage return on sales 1. Compute the target cost of this product. 2. Compute the target cost if Majesty wants a 43 percent return on sales. 3. Compute the target cost if Majesty wants a 13 percent return on sales.

Majesty Company uses target costing to ensure that its products are profitable. Assume Majesty is planning to introduce a new product with the following estimates: Required: 1. Compute the target cost of this product. 2. Compute the target cost if Majesty wants a 43 percent return on sales. 3. Compute the target cost if Majesty wants a 13 percent return on sales