Majesty Company uses target costing to ensure that its products are profitable. Assume Majesty is planning to introduce a new product with the following estimates: Estimated market price $ 2,100 Annual demand 97,000 units Life cycle 4 years Target profit 27 % return on sales Required: 1. Compute the target cost of this product. 2. Compute the target cost if Majesty wants a 38 percent return on sales. 3. Compute the target cost if Majesty wants a 10 percent return on sales.

Lipman auto parts, a family-owned auto parts store, began january with $10,300.00 in cash. management forecasts that collections from credit customers will be $11,400.00 in january and $14,800.00 in february. the store is scheduled to receive $5,000.00 in cash on a business note receivable in january. projected cash payments include inventory purchases ($13,000.00 in january and $13,600.00 in february) and operating expenses ($2,700.00 each month). lipman auto parts' bank requires a $10,000.00 minimum balance in the store's checking account. at the end of any month when the account balance dips below $10,000.00, the bank automatically extends credit to the store in multiples of $1,000.00. lipman auto parts borrows as little as possible and pays back loans in quarterly installments of $2,000.00, plus 4 percent interest on the entire unpaid principal. the first payment occurs three months after the loan.