Kallapur Company manufactures two products: KAP1, which sells for $120; and QUIN, which sells for $220. Estimated cost and production data for the current year are as follows Direct materials cost Direct labor cost ( $12/hr) Estimated production (units) KAP1 $ 30 $ 24 25,000 S 45 $ 60 15,000 In addition, fixed manufacturing overhead is estimated to be $2,000,000 and variable overhead is estimated to equal $3 per direct labor hour. Kallapur desires a 15 percent return on sales for all of its products Given the following information answers Calculate the target cost for both KAP1 and QUIN KAP1 QUIN Target cost 102 $ 187 Estimate the total manufacturing cost per unit of each product if fixed overhead costs are assigned to products on the basis of estimated production in units. Which of the products is earning the desired return? KAP1 QUIN Total manufacturing cost per unit S The product which earns the desired return is 110 S 170 QUIN Recalculate the total manufacturing cost per unit if fixed overhead costs are assigned to products on the basis of direct labor hours. Which of the products is earning the desired return? KAP1 QUIN Total manufacturing cost per units The product which earns the desired return is 92 $ 200