TB MC Qu. 13-31 (Algo) Target cost per unit: Tool Industries

Tool Industries manufactures large workbenches for industrial use. Sam Hartnet, the Vice President for marketing at Tool Industries, concluded from market analysis that sales were dwindling for Tool's workbenches due to aggressive pricing by competitors. Tool's workbench sells for $1,890 whereas the competition's comparable workbench sells for $1,660. Sam determined that a price drop to $1,660 would be necessary to protect its market share and maintain an annual sales level of 14,500 workbenches.

Cost data based on sales of 14,500 workbenches:

	Budgeted Quantity	Actual Quantity	Actual Cost
Direct materials (pounds)	182,500	175,500	$ 3,457,500
Direct labor (hours)	75,800	75,250	828,750
Machine setups (number of setups)	1,650	1,180	257,500
Mechanical assembly (machine hours)	32,550	285,000	3,765,000

If the profit per unit is maintained, the target cost per unit is (rounded to the nearest whole dollar):