Madrid Manufacturing Is Considering the Manufacture of a New Product

Multiple Choice

Madrid Manufacturing is considering the manufacture of a new product. Madrid was hoping to sell theproduct for $504 per unit and estimated the total cost per unit to be $360. Madrid conducted market research and found out that the market is only willing to pay $462 for the new product. Using the target costing approach, what does the total per unit cost of the new product have to be if Madrid wants to achieve the same markup on total cost percentage that was used in their initial estimates of cost and selling price?

A) $327
B) $318
C) $300
D) $330