Oregon Equipment Company wants to develop a new log-splittingmachine for rural homeowners. Market research has determined thatthe company could sell 5,000 log-splitting machines per year at aretail price of $600 each. An independent catalog company wouldhandle sales for an annual fee of $3,000 plus $70 per unit sold.The cost of the raw materials required to produce the log-splittingmachines amounts to $50 per unit.
If company management desires a return equal to 10 percent of thefinal selling price, what is the target unit cost?
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