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Required information Problem 13-38 (Algo) Target Costing in a Service Firm [LO 13-1] [The following information applies to the questions displayed below.] UR Safe Systems

Required information Problem 13-38 (Algo) Target Costing in a Service Firm [LO 13-1] [The following information applies to the questions displayed below.] UR Safe Systems Installs home security systems. Two of its systems, the ICU 100 and the ICU 900, have these characteristics: Design Specifications ICU 100 ICU 900 Cost Data Video cameras 1 3 $ 107/ea Video monitors 1 5 $ 21/ea Motion detectors 1 4 $ 13/ea Floodlights 3 3 $ 7/ea Alarms 5 4 $ 12/ea Wiring 660 feet Installation 12 hour 1,060 feet 22 hour $ 0.2/feet $ 11/hour The ICU 100 sells for $850 installed, and the ICU 900 sells for $1,560 Installed. Part 1 (Algo) Required: 1. What are the current gross profit margin percentages on both systems? 2. UR Safe's management believes that it must drop the price on the ICU 100 to $790 and on the ICU 900 to $1,430 to remain competitive in the market. Recalculate gross profit margin percentages for both products at these price levels and then compute the target cost needed for each product to maintain the current gross profit margin percentages. (For all requirements, round your percentage answers to 2 decimal places (l.e..1234 = 12.34%) and other answers to the nearest whole dollar amount.) Current profit 1. margin 2. Profit margin Target cost ICU 100 ICU 900 % % % %

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