Data Storage Solution Ltd (DSS) manufactures components for laptop computers. One of its top selling products is the new solid-state drive, the InstaMem, which will offer improved speed and performance. Earlier this year, a Korean company entered the market offering a similar drive at a price 20% below the InstaMem price of $300 per unit. DSS is currently achieving its target profit margin of 30% on all of its products.

Required:

1. What target cost would have to be set for the InstaMem drive to remain competitive and meet the requirements of the companys target profit margin? (2 marks)

2. Calculate the cost reduction objective. (1 mark)

3. Outline two cost management techniques DSS could apply to achieve the cost reduction objective.