Laser Impressions, Inc., manufactures color laser printers. Model J20 presently sells for $150 and has a total product cost of $120, as follows:

Target Costing Laser Impressions, Inc., manufactures color laser printers. Model J20 presently sells for $150 and has a total product cost of $120, as follows: $90 Direct materials Direct labor 20 10 Factory overhead Tota $120 It is estimated that the competitive selling price for color laser printers of this type will drop to $140 next year. Laser Impressions has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost reduction ideas: 1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit. 2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $3 per unit. 3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 45% of the factory overhead are related to running injection molding machines