Summit Products, Incorporated is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $110 for such a widget and that 68,000 units could be sold each year at this price. The current cost to produce the widget is estimated to be $62.

Summit has learned that a competitor plans to introduce a similar widget at a price of $100. In response, Summit may reduce its selling price to $100. If Summit requires a 25% return on sales, what is the target cost for the new widget?

Multiple Choice

• $25.00

• $75.00

• $27.50

• $100.00