PLM's Managers Are Attempting to Build a New Product, a Better

Multiple Choice

PLM's managers are attempting to build a new product, a better mousetrap. They began by determining the features customers wanted and what they would pay for those features. PLM's engineers then reverse-engineered a competitor's product to understand its design and related production processes. Their analysis indicated that customers would pay $10.00 for a better mousetrap. If PLM's required profit margin is 25%, the target cost of a better mousetrap is:

A) $7.50
B) $12.50
C) $2.50
D) None of the above