Rundle Cameras, Inc. manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Rundle uses an activity-based costing system. The following are the relevant cost data for the previous month:

Direct Cost per Unit Model ZM Model DS

Direct materials $20.10 $9.00

Direct labor 28.20 11.00

Category Estimated Cost Cost Driver Use of Cost Driver

Unit level $24,990 Number of units ZM: 2,400 units; DS: 9,500 units

Batch level 43,200 Number of setups ZM: 24 setups; DS: 24 setups

Product level 88,750 Number of TV commercials ZM: 13; DS: 12

Facility level 228,000 Number of machine hours ZM: 400 hours; DS: 800 hours

Total $384,940

Rundle's facility has the capacity to operate 3,600 machine hours per month.

Required

1. Compute the cost per unit for each product.
2. The current market price for products comparable to Model ZM is $120 and for DS is $86. If Rundle sold all of its products at the market prices, what was its profit or loss for the previous month?
3. A market expert believes that Rundle can sell as many cameras as it can produce by pricing Model ZM at $115 and Model DS at $40. Rundle would like to use those estimates as its target prices and have a profit margin of 30 percent of target prices. What is the target cost for each product?