Toyota Motor Corporation uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price
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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 $22,000. Assume further that the Camry’s total unit cost for the upcoming model year is estimated to be $18,100 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 Camry for the upcoming model year?
(b) What impact will target costing have on Toyota, given the assumed information?
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a The price will be set at the estimated market price required to remain competitive or 22000 Under ...View the full answer
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