Premo Pens, Inc

question 82

Multiple Choice

Premo Pens, Inc. is in the process of developing a new pen to replace its existing top-of-line Executive Model. Market research has identified the critical features the pen must have and it is estimated that customers would be willing to pay $30 for a pen with these features. Premo's production manager estimates that it will cost $26 to produce the proposed model. The current Executive Model sells for $24 and has a total production cost of $20. A competitor sells a pen similar to the proposed model, but without Premo's patented easy retract feature, for $28. It is estimated to cost the competitor $25 to produce. If Premo seeks to earn a 20% return on sales on the new model, which of the following represents the target cost for the new pen?

• A) $26.00.
• B) $22.40.
• C) $24.00.
• D) $19.80.

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Definitions:

Sensory Pathway Neurons

Nerve cells involved in the transmission of sensory information from the body's receptors to the brain.

Keyboard

An input device consisting of a set of individual keys similar to those of a typewriter, used for entering data into a computer or other electronic device.

Reflexes

Automatic, involuntary responses to specific stimuli that occur without conscious thought, as part of the body’s defense mechanisms.

GABA

Gamma-aminobutyric acid, a neurotransmitter in the brain that inhibits or reduces the activity of neurons, playing a key role in regulating nervous system excitability.