Blade Runner produces regular scooters and motorised scooters. Blade Runner scooters are considered the most reliable in the marketplace. Demand has been volatile, with huge increases in demand during the holiday season. In the past, the entity lled demand by anticipating demand increases and manufacturing inventories ahead of time. Recently, competition in the motorised scooter line has escalated, and Blade Runner needs to reduce prices and. therefore, cut costs. The motorised scooter's current cost is $150. To be competitive, the marketing department says the price should be 10 per cent lower than the current price. Management currently achieves a pre-taX return of 10 per cent on sales of the scooters and wants to continue this rate of retum. The following per-unit costs for motorised scooters are based on production of 700 000 per year. Direct materials (variable) 5 45 Direct labour (variable) 15 Machining costs (fixed depreciation and maintenance) 10 Inspection costs (variable) 10 Engineering costs (xed) 20 Marketing costs (fixed) 25 Administrative costs (xed) g Total cost Si Required a) Calculate the current selling price b) Calculate the price recommended by the marketing department c) Given the price you calculated in (b) above, calculate the target cost d) Calculate the planned cost reduction for each cost category, assuming proportional cost reduction across categories e) Describe the next step in a kaizen cost improvement process D Suggest areas that Blade Runner may be able to nd cost improvements