4-59 (Static) Target Costing (LO 4-3) Polar Industries makes refrigerators. Polar's management wants to market refrigerators to students in dorm rooms and small apartments by making a compact refrigerator. The competition, led by Walmart, prices small refrigerators at $46 each. The production manager at Polar Industries estimates that the small refrigerator could be produced for the following manufacturing costs. Direct materials Direct labor Manufacturing overhead Total $ 24 10 8 $42 Polar's management wants to make an operating margin of 10 percent (operating margin equals revenues minus manufacturing costs). Required: a. Suppose Polar uses cost-plus pricing, setting the price to manufacturing costs plus 10 percent of manufacturing costs. What price should it charge for the refrigerator? b. Suppose Polar uses target costing. What is the highest acceptable manufacturing cost for which Polar would be willing to produce the small refrigerator? Complete this question by entering your answers in the tabs below. Required A Required B Suppose Polar uses cost-plus pricing, setting the price to manufacturing costs plus 10 percent of manufacturing costs. What price should it charge for the refrigerator? (Round your answer to 2 decimal places.) Cost plus price < Required A Required B > Problem 4-59 (Static) Target Costing (LO 4-3) Polar Industries makes refrigerators. Polar's management wants to market refrigerators to students in dorm rooms and small apartments by making a compact refrigerator. The competition, led by Walmart, prices small refrigerators at $46 each. The production manager at Polar Industries estimates that the small refrigerator could be produced for the following manufacturing costs. Direct materials Direct labor Manufacturing overhead Total $ 24 10 8 $42 Polar's management wants to make an operating margin of 10 percent (operating margin equals revenues minus manufacturing costs). Required: a. Suppose Polar uses cost-plus pricing, setting the price to manufacturing costs plus 10 percent of manufacturing costs. What price should it charge for the refrigerator? b. Suppose Polar uses target costing. What is the highest acceptable manufacturing cost for which Polar would be willing to produce the small refrigerator? Complete this question by entering your answers in the tabs below. Required A Required B Suppose Polar uses target costing. What is the highest acceptable manufacturing cost for which Polar would be willing to produce the small refrigerator? (Round your answer to 2 decimal places.) Highest acceptable cost < Required A Required B >