For many years, Leno Corporation has used a straightforward cost$-$plus pricing system, marking ins goods up

approximately $25$ percent of total cost. The company has been profitable; however, it has recently lost considerable

business to foreign competitors that have become very aggressive in the marketplace. These firms appear to be using

target costing.

An example of Leno's problem is typried by rem number $8976,$ which has the following unt$-$cost characteristics:

The going market price for an identical product of comparable quality is $$600,$ which is significantly below what Leno is

charging.

Required:

Which of the two approsches could be aptly labeled price$-$led costing?

Which of the two approaches could be apty labeled price$-$led costing?

$2$ What is Leno's current selling price of them number $8976?$

Current selling price

If Leno used target costing for item number $8976,$ what must happen to costs if the company desires to meet the market price and

maintain its current rate of profit on soles? By how much?

its cost by

Would the identfication of value$-$added and non$-$value$-$added costs asslst Leno in this situation?

Would the identification of value:added and non$-$value$-$added costs assist Leno in this situation?

Suppose that by prevous cost$-$curting drives, costs had already been "pared to the bone" on item number $8976.$ What might Leno

be forced to do with its markup on cost to remaln compective? By how much?

Note: Do not round intermediate calculations. Round your percentage answer to $2$ decimal places $(1.$e$.,0\mathrm{.}1234$ should be entered

as $1234).$

markup by

In many indussies, prices are the result of an interaction between market forces and costs.

In many industies, prices are the result of an interaction betwesen market forces and costs.