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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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