Miami Industries currently sells an industrial mixer for $1,000 that market leaders sell for $920. The current costs to manufacture and distribute the mixer total $730, and the company has a profit goal of 30% of sales. Miami uses target costing in its efforts to be a leader in the marketplace. On the basis of this information, (1) what should Miami consider to be the initial driver of the target-costing process and (2) what amount of cost reduction is needed for the company to achieve its goals?

	Initial Driver	Cost Reduction
A.	Current price of $1,000	$15
B.	Current price of $1,000	$86
C.	Market leaders price of $920	$15
D.	Market leaders price of $920	$86
E.	Market leaders price of $920	Some other amount

Multiple Choice

Choice A

Choice B

Choice C

Choice D

Choice E