QUESTION a 101mm :Smmmr Babe Pencil Sham-nor Comganx Babe Pencil Sharpener Company designs and manufactures electric pencil Sharpeners which they sell through college bookstores. Their customers have asked fora new less expensive model, expected to sell for$12 at the bookstores. Baho's product manager believes the bookstores can sell 20.000 unlts over the expected 2 veer life of the product. The bookstores requlre a 30% gross margtn. Design engineers Indicate the design cost for the new sharpener wlII be $15,000. Selllng and admlnlstration costs are expected to be 15% of Batio's selling price; Babe management expects an 8% pre-tait prot on all new products. The product manager receives approval to proceed with the design and contacts suppliers for the three components needed forthe sharpener and receives rst pass cost estimates as follows: The product manager works with manufacturing and determines each sharpener will take 3 minutes to assemble and test at a rate of $24.00 per hour for direct labor and manufacturing overhead. She also works with marketing to assess customer expectations of features for the new sharpener: - 0% Blades 50% Electronics 0% Casln _. 30% Blades The target manufacturing cost for the new electric pencil sharpener is: OAEM 0 I31:932 0 c1W2 O 016.39