Answer:
Allowable unit cost of a hydraulic valve using the target costing model = 52.4
Explanation:
Given that:
Simon Corporation manufactures hydraulic valves. The product life of a valve is 4 years.
Target average profit margin for Simon 20.00% 
 The company does not expect the manufacturing cost to vary over the next 4 years
Estimated sales volume and the unit selling price of the valve for the next 4 years is given below: 
Year                  Sales volume (units)                   Unit selling price 
Year 1                       40,000                                 $80.00 
Year 2                      50,000                                 $75.00 
Year 3                     35,000                                   $50.00
Year 4                      25,000                                  $45.00
The objective is to determine the allowable unit cost of a hydraulic valve using the target costing model.
The Cost for each unit selling price can be calculated as:
= unit selling price - (Target average profit margin × unit selling price) 
For Year 1 
=  $80.00- (0.2 × $80.00)
= $80.00 - $16.00
= $64.00
For Year 2
= $75.00 - ( 0.2 × $75.00)
= $75.00 - ( $15.00)
= $60.00
Year 3
= $50.00 - (0.2× $50.00)
= $50.00 - $10.00
= $40.00
Year 4
= $45.00 - (0.2 × $45.00)
=$45.00 - $9.00
= $36.00
Year       Sales volume    Unit                Cost          Cost per Unit
                 (units)             selling price  
Year 1       40,000          $80.00          $64.00       $2560000
Year 2      50,000          $75.00          $60.00       $3000000
Year 3      35,000          $50.00          $40.00        $1400000
Year 4       25,000          $45.00         $36.00        $900000
Total:        150000                                                    $7860000
Allowable unit cost = Total cost/Total number of unit cost
Allowable unit cost = $7860000/150000 
Allowable unit cost = 52.4