Answer:
The cost of production must decrease by $5 per unit.
Explanation:
Giving the following information:
Selling price= $62 per unit.
Jaybird desires a $22 profit per unit.
Jaybird expects to sell 6,200 units.
Variable product cost per unit $ 19
Variable administrative cost per unit 12
Total fixed overhead 57,000
Total fixed administrative 30,000
First, we need to calculate the unitary cost of production:
Unitary cost= 19 + 12 + (57,000+30,000)/6,200= $45
Target cost= 62-22= $40
The cost of production must decrease by $5 per unit.
