Sarasota Company makes swimsuits and sells these suits directly to retailers. Although Sarasota has a variety of suits,

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Sarasota Company makes swimsuits and sells these suitsdirectly to retailers. Although Sarasota has a variety ofsuits, it does not make the Performance suit used by highly skilledswimmers. The market research department believes that a strongmarket exists for this type of suit. The department indicates thatthe Performance suit would sell for approximately $100. Given itsexperience, Sarasota believes the Performance suit wouldhave the following manufacturing costs.
Direct materials
Direct labor
Manufacturing overhead
36
Total costs
$100
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Assume that Sarasota uses cost-plus pricing, settingthe selling price 25% above its costs. What would be the pricecharged for the Performance swimsuit?
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Assume that Sarasota uses target costing. What is theprice that Sarasota would charge the retailer for thePerformance swimsuit?
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What is the highest acceptable manufacturingcost Sarasota would be willing to incur to produce thePerformance swimsuit, if it desired a profit of $25 per unit?(Assume target costing.)