Calculating Target Cost Radar Inc. has developed a new and improved widget. The company plans to sell the product through an existing Web site. Radar’s marketing department believes the product will...

Radar Inc. has developed a new and improved widget. The company plans to sell the product through an existing Web site. Radar’s marketing department believes the product will sell for $50.

Radar’s goal is a 40 percent profit margin on the widget.

Required:

1. If current prototypes cost $35 to produce, will Radar meet its profit goal?

2. Calculate the target cost necessary for Radar to earn 40 percent profit.

3. Suggest at least three areas that Radar might investigate for ways to cut the prototype cost enough to meet the target profit for this product.