MLine plc is a specialist motorcycle manufacturer and intends to produce a new motorcycle for the new generation. The motorcycle will be called MLX$.$ The production will be limited to $1,000$ units of MLS$.$

MLine is considering using the target costing approach and has conducted market research to determine the features that consumers require in a motorcycle of that type. Based on this market research and lanowledge of competitors products, MLine has decided to price the MLV at $\backslash (\backslash$$ $19,950\backslash ).$ MLine requires an operating profit margin of $\backslash (25\backslash \%\backslash )$ of the selling price of the motorcycle. MLine uses activity$-$based costing principles to assign overhead costs to units of production, and details for the forthcoming year are as follows:

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Advanced Management Accounting $-$ DFA$3101$Y$(5)$

Notes: $\backslash (\backslash$square $\backslash )$

$1.$ The production line that would be used for MLine has a capacity of $60,000$ machine hours per year. The production line time required for $\backslash ($ M L $\backslash$times $\backslash )$ is $6$ machine hours per motorcycle. This production line will also be used to make other motorcycles and will be working at full capacity.

$2.$ Some models of motorcycles are delivered to showrooms using car transporters. Only $\backslash (40\backslash \%\backslash )$ of the transportation costs are related to the distance travelled.

The motorcycle transporters are forecast to make a total of $640$ deliveries in the year, and carry $10$ motorcycles each time. The motorcycle transporter will always carry its maximum capacity of $10$ motorcycles.

The total annual distance travelled by motorcycle transporters is expected to be $\backslash (225,000\backslash$mathrm$\{$kms$\}\backslash ).\backslash (50,000\backslash$mathrm$\{$kms$\}\backslash )$ of this is for the delivery of the MLX$/$ only. All $\backslash (1,000\backslash$mathrm$\{$ML$\}\backslash$times $\backslash )$ motorcycles that will be produced will be delivered in the year using the motorcycle transporters.

Required: $\backslash (\backslash$square $\backslash )$

$($i$)$ Calculate the target cost and the current cost gap for an MLX motorcycle.

$[16$ marks$]$

$($ii$)$ Explain THREE benefits to MLine plc of adopting a target costing approach at an early stage in the product development process.

$[9$ marks$]$