Steven Corporation manufactures fishing poles that have a price of $21.00.It has costs of $16.32.A competitor is introducing a new fishing pole that will sell for $18.00.Management believes it must lower the price to $18.00 to compete in the highly cost-conscious fishing pole market.Marketing believes that the new price will maintain the current sales level.Steven Corporation's sales are currently 200,000 poles per year.Required:
a.What is the target cost for the new price if target operating income is 20% of sales?
b.What is the change in operating income for the year if $18.00 is the new price and costs remain the same?
c.What is the target cost per unit if the selling price is reduced to $18.00 and the company wants to maintain its same income level?

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The Answer of Steven Corporation manufactures fishing poles that have a price of $21.00.It has costs of $16.32.A competitor is introducing a new fishing pole that will sell for $18.00.Management believes it must lower the price to $18.00 to compete in the highly cost-conscious fishing pole market.Marketing believes that the new price will maintain the current sales level.Steven Corporation's sales are currently 200,000 poles per year.Required:
a.What is the target cost for the new price if target operating income is 20% of sales?
b.What is the change in operating income for the year if $18.00 is the new price and costs remain the same?
c.What is the target cost per unit if the selling price is reduced to $18.00 and the company wants to maintain its same income level?

Steven Corporation Manufactures Fishing Poles That Have a Price of $21.00.It