Golden Plumbing Fixtures is developing a preplumbed acrylic shower unit. The team developing the product includes representatives from marketing, engineering, and cost accounting. To date, the team has developed a set of features that it plans to incorporate in the unit, including a seat, two shower heads, four body sprays, and a steam unit. With this set of features, the team believes that a price of $4,000 will be attractive in the marketplace. Golden seeks to earn a per unit profit of 30 percent of selling price.

Calculate the target cost per unit.

Target cost

$enter the target cost per unit amount in dollars per unit

eTextbook and Media

The team has estimated that the fixed production costs associated with the product will be $1,800,000, and variable costs to produce and sell the item will be $1,800 per unit. In light of this, how many units must be produced and sold to meet the target cost per unit?

Units produced and sold

enter the number of units produced and sold units

eTextbook and Media

Suppose the company decides that only 500 units can be sold at a price of $4,000 and, therefore, the target cost cannot be reached. The company is considering dropping the steam feature, which adds $890 of variable cost per unit. With this feature dropped, the company believes it can sell 1,800 units at $4,200 per unit. Will Golden be able to produce the item at the new target cost or less?

New target cost per unit		$enter a dollar amount
New cost per unit		$enter a dollar amount

Golden select between will be and will not be will bewill not be able to produce the item at the new target cost or less.