Gourmet Sausages sells for $14.00 per 750- pack based on a cost-plus pricing system. Prices are based on cost plus a 40 percent markup. The management employed a consultant to investigate as to why the sales of Gourmet Sausages are falling. The consultant informed the management that a new competitor entered the market recently. The competitor offers a similar product for $12.50 per 750- gram pack. The consultant advised the management to reduce the price to match the price of the competitor or offer a more superior product to the competitors one.

1.What should the target cost be if the management wish to match the competitors price and maintain its existing markup?