Target Costing Laser Impressions, Inc., manufactures color laser printers. Model 320 presently sells for $600 and has a total product cost of $480, as follows: $350 Direct labor 40 $480 It is estimated that the competitive selling price for color laser printers of this type will drop to $570 next year. Laser Impressions 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 six minutes per unit of direct labor but reduce the materials cost by $12 per unit. 3. Decrease the cyde time of the injection molding machine from four minutes to three 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 $38 per hour. a. Determine the target cost for Model 320 assuming that the historical markup on product cost and selling price are maintained. Round your final answer to two decimal places. 475 b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decima 5 c. Evaluate the three engineering improvements togethe numbers. Do not round interim calculations but round your final answers to two decimal places r to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive 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 six minutes per unit of direct labor but reduce the materials cost by $12 per unit. 3. Decrease the cyde time of the injection molding machine from four minutes to three 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 $38 per hour. a. Determine the target cost for Model 1320 assuming that the historical markup on product cost and selling price are maintained. Round your final answer to two 475 b. Determine the required cost reduction. Enter as a positive number. Round your final artswer to two decimal places. e 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 improvement Total savings PreviousNe 5 more Check My Work uses remaining a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service quoting a price of $22 per layout page. The budget for the Publication Department for the current year is as $319,400 72,600 38,700 48,400 43,600 29,000 $551,700 Supplies Office expenses Computer depreciation Total The department expects to lay out 22,000 pages for the current year. The Publication Department office space and equipment would be used for future administrative needs, if the departmnt's function were purchased from the outside a. Prepare a differential analysis dated February 22 to determine whether TAG-D should lay out pages internally (Alternative 1) or purchase layout services from the outside (Alternative 2). If an amount is zero, enter "O" For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lay out Pages Internally (Alt. 1) or Purchase Lay out Services (Alt. 2) February 22 Differential Effect on Income (Alternative 2) Lay out Pages In sn ly (Alternative 1) Purchase Lay out Services (Alternative 2) I analysis dated February 22 to determine whether TAG-D should lay out pages a. Prepare a d ly (Alternative 1) or al the outside (Alternative 2). If an amount is zero, enter "O". For those boxes in which you must enter subtracted or negative numbers use a minus sign Differential Analysis Lay out Pages Internally (Alt. 1) or Purchase Lay out Services (Alt. 2) February 22 Lay out Pages Internally (Alternative 1) so Purchase Lay out so Purchase price of lay out work Office expenses than performing the lay out work internally. The fixed costs (depreciation b. The benefit from using an outside service is shown to be expenses) in the budget are basis. purchased from the outside on a strictly financial to the decision. Thus, the work should of the decision. the five employees, the guild should consider the c. Before electing to