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Alex Company designs, manufactures, and sells a new product. The following is the cost for the expected production of 400 units: Design cost $ 12,000
Alex Company designs, manufactures, and sells a new product. The following is the cost for the expected production of 400 units:
Design cost $ 12,000
Direct materials 118,000
Direct manufacturing labor 102,000
Variable manufacturing overhead 68,000
Fixed manufacturing overhead 80,000
Marketing 20,000
The company can successfully market the product at selling price $1,200 per unit .The target operating income is 20% of revenue.
Required:
1. Is value engineering needed? Explain.
2. What is the meaning of locked-in cost?
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