Target CostingLaser Cast Inc. manufactures color laser printers. Model 320 presently sells for $450 and has a product cost of $360, as follows:Direct materials$260Direct labor70Factory overheadTotal$360It is estimated that the competitive selling price for color laser printers of this type will drop to $430 next year. Laser Cast has established atarget cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost-reduction ideas:301. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutesper unit.2. Add an inspection step that will add six minkstes per unit of direct labor but reduce the materials cost by $9 per unit.3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct laborand 40% of the factory overhead are related to running injection molding machines.The direct labor rate is $29 per hour.a. Determine the target cost for Model 320, assuming that the historical markup on product cost and selling price are maintained. Roundyour final answer to two decimal places.per unitb. Determine the required cost reduction. Round your final answer to two decimal places.per unitc. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Do not round It is estimated that the competitive selling price for color laser printers of this type will drop to $430 next year. Laser Cast has established atarget cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost-reduction ideas:1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutesper unit.2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $9 per unit.3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct laborand 40% of the factory overhead are related to running injection molding machines.The direct labor rate is $29 per hour.a. Determine the target cost for Model 320, assuming that the historical markup on product cost and selling price are maintained. Roundyour final answer to two decimal places.per unitsb. Determine the required cost reduction. Round your final answer to two decimal places.per unitc. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Do not roundinterim calculations but round your final answers to two decimal places.1. Direct labor reduction2. Additional inspection3. Injection molding productivity improvementTotal savingsper unitper unitper unitper unit

Target costing : Target costing is a cost management technique that entails deciding on a target…

a. Determine the target cost for Model 320, assuming that the historical markup on product cost and selling price are maintained. Round your final answer to two decimal places. per unit b. Determine the required cost reduction. Round your final answer to two decimal places. per unit

a. Determine the target cost for Model 320, assuming that the historical markup on product cost and selling price are maintained. Round your final answer to two decimal places. per unit b. Determine the required cost reduction. Round your final answer to two decimal places. per unit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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