Somerset Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $24 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 40% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $8.00 Direct labor 12.00 Factory overhead (40% of direct labor) 4.80 Total cost per unit $24.80 If Somerset Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 25% of the direct labor costs. a. Prepare a differential analysis dated April 30 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. If an amount is zero, enter "0". If required, round your answers to two decimal places. Differential Analysis Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2) April 30 Make Buy Carrying Carrying Case Differential Case (Alternative 1) (Alternative 2) Effects (Alternative 2) Unit costs: Purchase price 24.8 X 24.8 X Direct materials v Direct Labor Variable factory overhead Fixed factory overhead -1.8 Total unit costs 26.6 X 1.8 Target Costing Toyota Motor Corporation (TM) uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be $27,000. Assume further that the Camry's total unit cost for the upcoming model year is estimated to be $22,500 and that Toyota requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost). a. What price will Toyota establish for the Camry for the upcoming model year? -28,125 X b. Since the estimated manufacturing cost exceeds - v the target cost, Toyota must reduce its total costs to maintain competitive pricing within its profit objectives. Feedback