Turnhilm,Inc

question 94

Essay

Turnhilm,Inc.is considering adding a small electric mower to its product line.Management believes that in order to be competitive,the mower cannot be priced above $139.The company requires a minimum return of 25% on its investments.Launching the new product would require an investment of $8,000,000.Sales are expected to be 40,000 units of the mower per year.
Required:
a)Compute the target cost of a mower.
b)Suppose the target cost calculated in part (b)above is not attainable using the company's current manufacturing facilities.Specifically,the average cost of producing the 40,000 units is $100 per unit.Besides abandoning the idea,what specific options are available to Turnhilm?
c)Suppose,using the company's current manufacturing facilities the average cost of producing the 40,000 units is only $80.What other specific options are available to Turnhilm?

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Definitions:

Type B Personality

A type of personality known for its peaceable, long-suffering, and casual qualities.

Stress Appraisal

Stress Appraisal is the process by which individuals evaluate and interpret a stressor to determine its significance and their ability to cope with it.

Stress Reaction

Stress Reaction describes the body's immediate response to stress, involving physical, emotional, and cognitive changes.

Stressor

Any event or situation that causes stress, challenging an individual's ability to cope.