The projected sales price for a new product (which is still in the development stage of the product life cycle) is $50 . The company has estimated the life-cycle cost to be $30 and the first-year cost to be $60 . On this type of product, the company requires a $12 per unit profit. What is the target cost of the new product?
a. $30
b. $38
c. $42
d. $60
B
Target Cost = Estimated Selling Price - Acceptable Profit Margin
Target Cost = $50 - $12
Target Cost = $38
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Indicate whether the statement is true or false