Combrai Informatique $($CI$)$ manufactures and sells computers and computer peripherals to several nationwide retail chains. Marcel Proust is the manager of the printer division. Its two largest selling printers are P$-41$ and P$-63.$ The manufacturing cost of each printer is calculated using CI$$s activity$-$based costing system. CI has one direct$-$manufacturing cost category $($direct materials$)$ and the following $$ve indirect manufacturing$-$cost pools:

Indirect manufacturing

cost pool Allocation base Allocation rate

$1$ Materials handling Number of parts $1\mathrm{.}20$ per part

$2$ Assembly management Hours of assembly time $40$ per hour of assembly time

$3$ Machine insertion of parts Number of machine$-$inserted parts $0\mathrm{.}70$ per machine$-$inserted part

$4$ Manual insertion of parts Number of manually inserted parts $2\mathrm{.}10$ per manually inserted part

$5$ Quality testing Hours of quality testing time $25$ per testing$$hour

Product characteristics of P$41$ and P$63$ are as follows:

P$-41$ P$-63$

Direct material costs $407\mathrm{.}50292\mathrm{.}10$

Number of parts $85$ parts $46$ parts

Hours of assembly time $3\mathrm{.}2$ hours $1\mathrm{.}9$ hours

Number of machine$-$inserted

parts $49$ parts $31$ parts

Number of manually inserted

parts $36$ parts $15$ parts

Hours of quality testing $1\mathrm{.}4$ hours $1\mathrm{.}1$ hours

Marcel has just received some bad news. A foreign competitor has introduced products very similar to P$41$ and P$-63.$ Given their announced selling prices, he estimates the P$-41$ clone to have a manufacturing cost of approximately $680$ and the P$-63$ clone to have a manufacturing cost of approximately $390.$ He calls a meeting of product designers and manufacturing personnel at the printer division. They all agree to have the $680$ and $390$gures become target costs for redesigned versions of CPS P$-41$ and P$-63,$ respectively. Product designers examine alternative ways of designing printers with comparable performance but lower cost. They come up with the following revised designs for P$-41$ and P$-63($termed P$-41$ REV and P$-63$ REV, respectively$)$:

P$-41$ REV P$-63$ REV

Direct material costs $381\mathrm{.}20263\mathrm{.}10$

Number of parts $71$ parts $39$ parts

Hours of assembly time $2\mathrm{.}1$ hours $1\mathrm{.}6$ hours

Number of machine$-$inserted parts $59$ parts $29$ parts

Number of manually inserted parts $12$ parts $10$ parts

Hours of quality testing $1\mathrm{.}2$ hours $0\mathrm{.}9$ hours What is the manufacturing cost of P$-41$ REV? How much P$-63$ REV is below $(-)$ or above $(+)$ its target cost?Assume now that Marcel has achieved major cost reductions in one of the activity areas. As a consequence, the allocation rate in the assembly$-$management activity area will be reduced from $40$ to $28$ per assembly$-$hour. How will this activity$-$area cost reduction affect the manufacturing costs of P$41$ REV, ie$.$ how much manufacturing cost of P$-41$ REV decrease?