13-18 Target costs, effect of product-design changes on product costs. Medical Instruments uses a manufacturing costing system with one direct cost category (direct materials) and three indirect cost categories:

Setup, production order, and materials-handling costs that vary with the number of batches.

Manufacturing operations costs that vary with machine-hours.

Costs of engineering changes that vary with the number of engineering changes made.

In response to competitive pressures at the end of 2021, Medical Instruments used value-engineering techniques to reduce manufacturing costs. Actual information for 2021 and 2022 is

13.3-26 Full Alternative Text The management of Medical Instruments wants to evaluate whether value engineering has succeeded in reducing the target manufacturing cost per unit of one of its products, HJ6, by 2%.

Actual results for 2021 and 2022 for HJ6 are

13.3-27 Full Alternative Text Required Calculate the manufacturing cost per unit of HJ6 in 2021.

Calculate the manufacturing cost per unit of HJ6 in 2022.

Did Medical Instruments achieve the target manufacturing cost per unit for HJ6 in 2022? Explain.

Explain how Medical Instruments reduced the manufacturing cost per unit of HJ6 in 2022.