1. Calculate the target selling price for both models using the cost-plus pricing.

2. Assume LALA's management plans to use target costing for RAS17 to remain competitive,

a. calculate the selling price that would be charged for RAS17?

b. what would be the highest acceptable target cost?

c. by how much must the current total costs change to meet the target cost in (b)?

3. Refer to the information in requirement (2). Suppose approximately 45% of manufacturing costs for RAS17 consist of materials that are purchased from suppliers. Key suppliers on the target costing team have suggested process improvements that will reduce supplier cost by 20%. Will this help LALA achieve its target cost? Explain and show your computation.