Maxi Company manufactures a wide variety of parts for recreation boating, including a gear and driveshaft part for high-powered outboard boat engines. Original equipment manufacturers such as Mercury and Honda purchase the components for use in large powerful outboards. The part sells for P 610and sales volume averages 25,000 units per year. Recently, Maxi’s major competitor reduced the price of its equivalent unit P 550. The market is very competitive and Maxi realizes it must meet the new price or lose significant market share. The controller has assembled these costs and usage data for the most recent year for Maxi’s production of 25,000 units
Required: 1. Calculate the target cost for maintaining current market share and profitability. 2. Can the target cost be achieved? Explain in your words.