A consumer goods company develops a new product with a target selling price of $50/unit. Current costs estimate: Direct materials $20/unit, direct labor $10/unit, overhead $15/unit.

• Requirements:
  • Calculate the target cost per unit and the target cost gap.
  • Discuss value engineering techniques to achieve the target cost.
  • Analyze the feasibility of achieving the target cost based on current cost estimates.
  • Recommend cost reduction strategies to meet the target cost.
  • Evaluate the impact of target costing on product profitability and market competitiveness.