EXERCISES 1. Leno Company makes swimsuits and sells these suits directly to retailers. Although Leon has a variety of suits, it does make the All-Body suit used by highly skilled swimmers. 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 manufacturing costs Direct materials Direct labor Manufacturing overhead Total costs $ 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 circumstances 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 (assuming target costing)