Target Costing Basic Motor Corporation uses target costing. Assume that Basic marketing personnel estimate that the competitive selling price for the QuikCar in the upcoming model year will need to be $23,700. Assume further that the QuikCar's total unit cost for the upcoming model year is estimated to be $19,200 and that Basic requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost). a. What price will Basic establish for the QuikCar for the upcoming model year? $ b. What impact will target costing have on Basic, given the assumed information? The input in the box below will not be graded, but may be reviewed and considered by your instructor. Hide Feedback Partially Correct Check My Work Feedback
a. What dictates the price?
b. Subtract the 20% desired profit from the estimated price of $24,000.