Target Costing

Toyota Motor Corporation uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be $24,400. Assume further that the Camry's total unit cost for the upcoming model year is estimated to be $19,600 and that Toyota requires a 20% profit margin on selling price (which is equivalent to a 25% An amount that is added to a cost amount to determine product price.markup on total cost).

a. What price will Toyota establish for the Camry for the upcoming model year?