Q1)

PressNesso always use a target costing approach for their products and they have identified a cost gap of 8 per unit for their new EZT drinks machine. The current estimated variable production cost is 44 per unit and estimated total fixed costs are 60 million. The company requires a sales margin of 25% on all products (using full cost) and have budgeted total sales of the EZT of 10 million units.

What is the target selling price using a target costing approach?