Target costing and pricing. Mega Products makes valves for a variety of oil extraction equipment. Mega Products sells the valves to companies that manufacture and sell pumps. The company’s market research department has discovered a market for valves that is similar in automated manufacturing equipment in another industry. The market research department indicates that they could sell to these new outlets for $250. Assume Mega Products desires an operating profit of 20 percent of sales.

Required: 

What is the highest acceptable manufacturing cost for which Mega Products would produce the valves?