Happy Ltd invested $500,000 in the manufacture of a new product and estimated data for the coming year are given below:

Units to product & sell: 4000

Variable costs:

Manufacturing - $204,000

Selling and administrative - $14,700

Total - $218,700

Fixed costs:

Manufacturing - $36,000

Selling and administrative - $27,300

Total - $63,300

The company uses a cost-plus approach for product pricing and desires a rate of return of 21 percent per year on the amount invested. A similar product in the market is selling for $88 per unit.

Required:

a] determine the desired profit per year

b] determine the mark up percentage and selling price per unit of the new product using

i] variable cost concept

ii] product cost concept

Round your answers to 2 decimal places.

c] determine the selling price of the new product per unit and the total amount of cost reduction required per year if target costing is used.