24 Question 5(b): Target Costing 4 Marks A Toy Company T expects to successfully launch Toy Z based on a film character. T must pay 15% Royalty on the Selling Price to the Film Company. T's targets a Selling Price of 100 per toy and Profits of 25% Selling Price. The following are the Cost data Forecast: Toy Component 8.50 Component B 7.00 Labour: 0.4 hr@ 60 per hour 24.00 Product Specific Overheads 13.50 In addition, each Toy requires 0.6 kg of Other Materials, which are supplied at cost of 16 per kg with a normal 4% sub- standard quality which is not usable in the manufacture. You are required to determine if the above cost structure is within the Target Cost. If not, what should be the extent of Cost Reduction