P&S (an electrical manufacturer) designs a new nightlight outlet. When it conducts concept tests with the electrical contractor (the consumer who will purchase and install the outlet in bathroom and kitchens), it finds contractors place a $9.99 value on the new product concept.

Q1: Contractors will purchase these outlets at their electrical distributor, who desires a margin of 40 percent. What price will P&S have to charge the distributor?

What is the target manufacturing cost? What is the target manufacturing cost?