Lisbon Manufacturing Is Considering the Manufacture of a New Product

question 24

Multiple Choice

Lisbon Manufacturing is considering the manufacture of a new product. Lisbon was hoping to sell the product for $588 per unit and estimated the total cost per unit to be $420. Lisbon conducted market research and found out that the market is only willing to pay $539 for the new product. Using the target costing approach, what does the total per unit cost of the new product have to be if Lisbon wants to achieve a 40% markup on total cost?

• A)$385.00
• B)$257.60
• C)$420.00
• D)$215.60

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Definitions:

Fovea

A small depression in the retina of the eye where visual acuity is highest.

Choroid

The vascular layer of the eye lying between the retina and the sclera, providing oxygen and nourishment to the outer layers of the retina.

Melanin

A pigment that gives color to skin, hair, and eyes, and protects against UV radiation.

Vascularized

Having blood vessels; supplied with or containing blood vessels.