=+7-36 KK Value engineering, target pricing and locked-in costs OBJECTIVES 3, 4 Pacific Dcor Pty Ltd, designs,

=+7-36 KK Value engineering, target pricing and locked-in costs OBJECTIVES 3, 4 Pacific Décor Pty Ltd, designs, manufactures and sells contemporary wood furniture. Ling Li is a furniture designer for Pacific. Li has spent much of the past month working on the design of a high-end dining room table. The design has been well received by Jose Alvarez, the product development manager. However, Jose wants to make sure that the table can be priced competitively. Amy Hoover, Pacific’s cost accountant, presents Jose with the following cost data for the expected production of 200 tables:

Design cost $5 000 Direct materials 120 000 Direct manufacturing labour 142 000 Variable manufacturing overhead 64 000 Fixed manufacturing overhead 46 500 Marketing 15 000 Required