Randolph Electric Motor Company (REMCO) manufactures electric motors for commercial use. The company produces three models, designated as standard, deluxe, and super. The company uses a job-order costing system with manufacturing overhead applied based on direct-labor hours. The system has been in place with little change for 25 years. Product costs and annual sales data are shown below.

		Standard		Deluxe		Super
		Model		Model		Model
Annual sales (units)		20,000		1,000		10,000
Product costs:
Materials used		$ 10		$ 25		$ 42
Direct labor:
Labor rate	$ 20		$ 20		$ 20
Labor hours used	0.5	10	1.0	20	1.0	20

For the past 10 years, the companys pricing formula has been to set each products target price at 110 percent of its full product costs. Recently, however, the standard-model motor has come under increasing price pressure from offshore competitors. The result was that the price on the standard model has been lowered to $110. John York, company president, recently asked Maddie Siler, the controller, Why can we not compete with these other companies? They are selling motors just like our standard model for $106. That is only a dollar more than our production cost. Are we that inefficient? What gives? Let me run a few numbers to demonstrate what I mean. These data are displayed in the following table:

Product Lines

Activity Cost Pool Cost Driver Standard Deluxe Super_____

Depreciation of mach. Machine hours 160,000 52,000 188,000

Maintenance, machinery

Engineering, inspection, Engineer. Hours 17,000 2,250 17,000

Repair of defects

Purchasing, shipping, # of material orders 2,400 500 2,300

Material handling

Misc. manuf. overhead Factory sq. ft. used 21,000 7,500 21,500

1. On Excel, compute the plant-wide predetermined manufacturing overhead rate. Also, prepare a table (see Format Example on REMCO Data Excel file) showing for each product line the estimated cost for direct materials, direct labor, and manufacturing overhead in total dollars and per unit. Calculate the target prices for the three models, based on the traditional, volume-based product-costing system. Pay attention to good form (using $ sign at the beginning and total amounts; proper underlines and double underlines; no cents unless per unit amount; proper headings with name of entity, name of schedule, and date for the schedule and headings for columns (center)). Be sure to type a number only once in the worksheet (entire file) and refer to it using formulas. Check figures: Standard model per unit cost = $105 and target price = $115.50