Sheridan Designs makes various accessories for pets. Their trademark product, PetBed, is perceived to be high quality but not extravagant, and is sold in a variety of pet stores. Carol Garcia, marketing manager, has convinced her boss that they are missing an Important segment of the market. "We can increase the quality of the material and design and market PetBed to a higher-end clientele," Carol claims. "We won't compete with our existing product. It's win-win!" PetBeds sell for $180 each. Carol estimates the gross margin at $60. After working with production engineers and the marketing research team, Carol has designed a bed that she believes the gew market segment will purchase $240 for. The production engineers and accountants believe it will cost about $180 to make.