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Multiple Choice

[The following information applies to the questions displayed below.]
Summit Products,Inc.is interested in producing and selling an improved widget.Market research indicates that customers would be willing to pay $90 for such a widget and that 50,000 units could be sold each year at this price.The current cost to produce the widget is estimated to be $65.
-Summit has learned that a competitor plans to introduce a similar widget at a price of $80.In response,Summit may reduce its selling price to $80.If Summit requires a 25% return on sales,what is the target cost for the new widget?

A) $80.00
B) $60.00
C) $23.75
D) $20.00