Ch. 25: Homework Target Costing Instant Image Inc. manufactures color laser printers. Model 120 presently sells for $300 and has a product cost of $240, as follows: Direct materials $170 Direct labor 50 Factory overhead 20 Total $240 i established a target cost to maintain its historical markup percentage on product cost. It is estimated that the competitive selling price for color laser printers of this type will drop to $290 next year. Instant Image has Engineers have provided the following cost-reduction ideas: n with screws. This will reduce the amount of direct labor by 9 minutes per unit. , t reduce the materials cost by $6 per unit. minutes per part. Thirty percent of the direct labor and 4 1. purchase a plastic printer cover with snap-on assembly rather tha 2. Add an inspection step that will add 6 minutes per unit of direct labor bu 3. Decrease the cycle time of the injection molding machine from 4 minutes to 3 machines. 0% of the factory overhead are related to running injection molding The direct labor rate is $21 per hour. a. Determine the target cost for Model 120 assuming that the historical markup on product cost and selling price is maintained. b. Determine the required cost reduction. . = ] i ing i i i cost reduction (drift) can be achieved. Do not round interim calculations but round your final answers to two | c. Evaluate the three engineering improvements together to determine whether the required ( ) | decimal places. 1. Direct labor reduction m\\\\\\lu per unit 2. Additional inspection 3. Injection molding productivity improvement u Total savings L S L 0 T Av_'msocm mev B |