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Utah Utensil has developed a new kitchen utensil. Th e fi rm has conducted signifi cant market research and estimated the following pattern for sales

Utah Utensil has developed a new kitchen utensil. Th e fi rm has

conducted signifi cant market research and estimated the following pattern for sales of

the new product:

Year Expected Volume Expected Price per Unit

1 48,000 units $19

2 48,000 units 20

3 90,000 units 16

4 40,000 units 12

If the fi rm desires to net $3.50 per unit in profi t over the life of the product, and selling

and administrative expenses are expected to average $50,000 per year, what is the target

cost to produce the new utensil?

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