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	$	2,400
Annual demand		93,000	units
Life cycle		6	years
Target profit		25	% return on sales

Required: 1. Compute the target cost of this product.

Target Cost

2. Compute the target cost if Majesty wants a 43 percent return on sales.

Target Cost

3. Compute the target cost if Majesty wants a 7 percent return on sales.

Target Cost