E22-1 Mesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company...
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E22-1 Mesa Cheese Company has developed a new cheese slicer called Slim Slicer. The company plans to sell this slicer through its catalog, which it issues monthly. Given market research, Mesa believes that it can charge $20 for the Slim Slicer. Prototypes of the Slim Slicer, however, are costing $22. By using cheaper materials and gaining efficiencies in mass production, Mesa believes it can reduce Slim Slicer's cost substantially. Mesa wishes to earn a return of 40% of the selling price. Instructions (a) Compute the target cost for the Slim Slicer (b) When is target costing particularly helpful in deciding whether to produce a given product
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