E8-3 Leno Company makes swimsuits and sells these suits directly to retailers. Although Leno has a variety of suits, it does not make the All-Body suit used by highly skilled swim- mers. The market research department believes that a strong market exists for this type of suit. The department indicates that the All-Body suit would sell for approximately $100 Given its experience, Leno believes the All-Body suit would have the following manufadc- turing costs. Direct materials Direct labor Manufacturing overhead Total costs s 25 30 45 $100 Instructions (a) Assume that Leno uses cost-plus pricing, setting the selling price 25% above its costs. (1) What would be the price charged for the All-Body swimsuit? (2) Under what cir- cumstances might Leno consider manufacturing the All-Body swimsuit given this approach? (b) Assume that Leno uses target costing. What is the price that Leno would charge the retailer for the All-Body swimsuit? (c) What is the highest acceptable manufacturing cost Leno would be willing to incur to produce the All-Body swimsuit, if it desired a profit of $25 per unit? (Assume target costing.)