ezBike (ezB) is a mechanical and electric bike manufacturer. ezB had been a successful in Europe and is now looking to enter the North American market. To do so, ezB has hired a market research company which determines the retail price for an electric mountain bike is $1,500. Because ezB is unknown in North America, ezB partners with American Bike Manufacturer Schwinn to effectively market and sell its electric bike. Schwinn demands 25% gross profit on each electric bike sold.

The market research company determines first year electric bike sales will be about 20,000. ezB requires a 15% return on sales (Operating Profit as a % of revenue) on each type of new bike it brings to market. The ezB development team estimates it will cost $1,500,000 to design and test this electric mountain bike. When completed, the bike will be sold to Schwinn in shipping containers which hold 40 bikes at a cost of $6,000 per container.

ezB estimates it will spend $750,000 on marketing for this mountain bike during the first year of sales. ezB will allocate 2% of its selling price to Schwinn to cover accounting, billing, legal, and other corporate support costs performed by ezB corporate groups.

In order for this electric mountain bike to meet Schwinn's and its own financial requirements, what is the Target Manufacturing Cost for the electric mountain bike?

Group of answer choices

a) $693.75

b) $843.75

c) $671.25

d) $746.25

e) $840.00

f) None of the above