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Target Costing Inc., manufactures color laser printers. Model 320 presently sells for $700 and has a total product cost of $560, as follows Direct materials
Target Costing Inc., manufactures color laser printers. Model 320 presently sells for $700 and has a total product cost of $560, as follows Direct materials Direct labor Factory overhead Total $400 110 50 $560 It is estimated that the competitive selling price for color laser printers of this type will drop to $670 next year. Laser Impressions has established a target cost to maintain percentage on product cost. Engineers have provided the following cost-reduction ideas 1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit. an inspection step that will add sik minutes per unit of direct labor but reduce the materials cost by $14 per unit. overhead are related to running injection molding machines the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 45% of The direct labor rate is $46 per hour. a. Determine the target cost for Model 1 places 20 assurming that the historical markup on product cost and selling price are maintained. Round your final answer to two decimal 536 b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places. 24 V c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places 1. Direct labor reduction 2. Additional inspection 3. Injection molding productivity improvementS4.6 X 5.10 X 6.9 X 10.58 X Total savings Feedback
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