Target Costing Laser Cast Inc. manufactures color laser printers. Model J20 presently sells for $475 and has a product cost of $380, as follows: Direct materials $270 Direct labor 70 Factory overhead 40 Total $380 It is estimated that the competitive selling price for color laser printers of this type will drop to $450 next year. Laser Cast has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost-reduction ideas: 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. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $9 per unit. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 40% of the factory overhead are related to running injection molding machines. The direct labor rate is $29 per hour.