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:

Group Involvement

is the degree to which members of a team or community actively participate and share in the group's activities and decision-making processes.

Radical Departure

A significant and often sudden change from previous methods, practices, or products, marking a break from traditional ways of doing things.

Four-Step Problem-Solving

A systematic approach to addressing issues that involves identifying the problem, developing potential solutions, implementing a solution, and evaluating the outcome.

Groupthink

A psychological phenomenon occurring within a group of people, where the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.