Texas Co. manufactures large valves for industrial use. The VP for marketing concluded from market analysis that sales were dwindling due to aggressive pricing by competitors. Sugarland's valve sells for $900 whereas the competition's comparable valve sells for $700. Jane determined that a price drop to $700 would be necessary to retain market share and annual sales of 5,000 valves. Cost data based on sales of 5,000 valves:

	Budgeted	Actual	Actual
	Quantity	Quantity	Costs
Direct Materials (pound)	90,000	72,000	$900,000
Direct Labor (hours)	90,000	80,000	$720,000
Machine Setup (# of setups)	30,000	28,000	$840,000
Assembly (machine hours)	50,000	44,000	$440,000

Required:

a) The current cost per unit based on actual data is :

b) The current profit per unit based on actual data is:

c) If the current level of profit dollar per unit is maintained, the target cost per unit is:

d) In order to reduce costs so as to reach the desired target cost, the company should also focus on reducing the cost of what manufacturing costs: