2 questions. please answer both.

For example, suppose a company is considering the production of a new trencher. The target price for the firm's goal of capturing a 25 percent market share is $260,000. The required profit per unit is $50,000. The target cost is $ x. The current product and process designs will produce a cost of $230,000. Thus, the cost reduction needed to achieve the target cost is $ x. A tear- down analysis of a competitor's trencher revealed a design improvement that promised to save $5,000 per unit. A marketing study of customer reactions revealed that the extra trenching speed in the new design was relatively unimportant. Eliminating this feature saved $10,000. Finally, the design team changed the process design and reduced test time by 50 percent, saving $6,000. The new projected cost of the trencher is now $ 1. Thus, the new trencher model will be approved because the projected cost now meets or is less than the target cost. Apply the Concepts Kramer Company currently produces a high-tech medical product with 20 parts. Design engineering has produced a new configuration for the product that requires only eight parts. Current activity capacity and demand (20-part configuration) and expected activity demand (8-part configuration) are provided. Current Expected Activity Activity Activity Activities Activity Driver Capacity Demand Demand Material Number of parts 300,000 300,000 120.000 Ambigars Director hours 15.000 15,000 7.500 Purchasing arts Number of orders 20.000 18.750 Additionally, the following activity cost data are provided: Material usage: $3 per part used; no fixed activity cost. Assembling parts: $12 per direct labor hour; no fixed activity cost Purchasing parts: Four salaried clerks, each earning a $30,000 annual salary; each clerk is capable of processing 5,000 purchase orders. Variable activity costs: $0.50 per purchase order processed for forms, postage, etc. 1. Calculate the cost reduction produced by the new design (round to the nearest dollar). 453,000 2. Suppose that 15,000 units are being produced and sold for a current price of $450 per unit and that the price per unit will be reduced by the per unit savings. The new price for the eight-part configured product is (round to the nearest cent): Cost reduction New 3. What if the expected activity demand for purchase orders was 4,6007 Calculate the effect on the answers in Requirements 1 and 2 (round your cost reduction to the nearest dollar and new price to the nearest cent): Cost reduction New price Apply the Concepts Kramer Company currently produces a high-tech medical product with 20 parts. Design engineering has produced a new configuration for the product that requires only eight parts. Current activity capacity and demand (20-part configuration) and expected activity demand (8-part configuration) are provided. Current Expected Activity Activity Activity Activities Activity Driver Capacity Demand Demand Mage Number of parts 300.000 300.000 Assembling parts Director hours 15.000 15.000 7,500 Additionally, the following activity cost data are provided: Material usage: $3 per part used; no fixed activity cost. Assembling parts: $12 per direct labor hour; no fixed activity cost. Purchasing parts: Four salaried clerks, each earning a $30,000 annual salary: each clerk is capable of processing 5,000 purchase orders. Variable activity costs: 50.50 per purchase order processed for forms, postage, etc. 1. Calculate the cost reduction produced by the new design (round to the nearest dollar). Cost reduction 453.000 x 2. Suppose that 15,000 units are being produced and sold for a current price of $450 per unit and that the price per unit will be reduced by the per unit savings. The new price for the eight-part configured product is (round to the nearest cent): 3. What if the expected activity demand for purchase orders was 4,600? Calculate the effect on the answers in Requirements 1 and 2 (round your cost reduction to the nearest dollar and new price to the nearest cent): Cost reduction New price