Target Costing Instant Image Inc. manufactures color laser printers. Model 320 presently sells for $250 and has a product cost of $200, as follows: Direct materials Direct labor Factory overhead Total $140 40 20 $200 It is estimated that the competitive selling price for color laser printers of this type will drop to $240 next year. Instant Image has established a target cost to maintain its historical markup 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. 2. Add an inspection step that will add 6 minutes per unit of direct labor but reduce the materials cost by $5 per unit. 3. Decrease the cycle time of the injection molding machine from 4 minutes to 3 minutes per part. Thirty percent of the direct labor and 45% of the factory overhead are related to running injection molding machines. The direct labor rate is $17 per hour. a. Determine the target cost for Model J20 assuming that the historical markup on product cost and selling price is maintained. $ b. Determine the required cost reduction. c. Evaluate the three engineering improvements together to determine whether the required cost reduction (drift) can be achieved. 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 improvement Total savings per unit per unit