Class C0 is performing a target costing analysis of a hearing aid (Class C02), which sells for $750 (Var. cost =$435, Op.hc =$700K at base volume) and has 30% of the market. However, a competitor has introduced a new model that incorporates a computer chip that improves quality. Its price is $850. A consumer analysis indicates that cost-conscious consumers will remain loyal to Class C0 as long as price does not exceed $600. Determine contribution amount for each of the 3 alternatives///show calculations BASE: Data Alternative A: Try to Maintain current Op.Inc. \& Contrib. Margin per unit: reduce SP to \$600, reduce R\&D, replace parts, and reduce inspection procedure-savings = [\$300K of fked &$120 unit of variable], no capital expendtures. Very small reduction in WC. -Alternative B: Do A AND replace parts deducting $30 unit variable to "A" option and reduce inspection Mfg. Foced procedure savings * \$150K Alternative C: staring with BASE, Increase R\&D with Capital exp. of $500K,5 yr. life, -0 - residual; increase R\&D to develop a computer chip based hearing aid, replace parts, Mfg. Foxed Exp., change inspection procedure, renegotiate new suppler contract-savings = $150K; increase commissions by 5% per unit; units increas 3%