Lisbon Manufacturing Is Considering the Manufacture of a New Product

Multiple Choice

Lisbon Manufacturing is considering the manufacture of a new product. Lisbon was hoping to sell the product for $588 per unit and estimated the total cost per unit to be $420. Lisbon conducted market research and found out that the market is only willing to pay $539 for the new product. Using the target costing approach, what does the total per unit cost of the new product have to be if Lisbon wants to achieve a 40% markup on total cost?

A) $215.60
B) $385.00
C) $257.60
D) $420.00