Mortlake Bottlers wants to sell a new flavor of bottled tea. Per 16 ounce bottle there are the following estimated costs: glass bottles 50 cents, brewed tea 65 cents, labels and bottling process $1.20, and distribution costs 85 cents. The company desires to make a profit equal to 10% of total costs. Competitors sell similar products for $3.25/16 ounce bottle and competition is fierce and very price competitive.

a. What is the target cost, target profit, and selling price?

b. Should the company proceed? If not, then why, and what could be done to change your answer?