Target Costing Toyota Motor Corporation (TM) uses target costing. Assume that Toyota marketing personnel estimate that the competitive, average selling price for the Rav4 in the upcoming model year will need to be $25,000. Assume further that the Rav4's total unit cost for the upcoming model year is estimated to be $21,000 and that Toyota requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost). a. What price will Toyota establish for the Rav4 for the upcoming model year? $ b. What impact will target costing have on Toyota, given the assumed information? Toyota will have to remove $1000 from its total costs in order to maintain competitive pricing within its profit objectives. Feedback Check My Work a. Determine what dictates the price. b. Subtract the 20% desired profit from the estimated price of $25,000. If the estimated manufacturing cost exceeds the target cost, then a company will try to remove the difference in order to remain competitive