The following additional information describes the existing design: a. Testing and inspection time per unit is 2.5 hours. b. 10% of the CE100s manufactured are reworked. c. Culter places two orders with each component supplier each month. Each component is supplied by a different supplier. d. It currently takes 1 hour to manufacture each unit of CE100. In response to competitive pressures, Culter must reduce its price to $62 per unit and its costs by $8 per unit. No additional sales are anticipated at this lower price. However, Cutler stands to lose significant sales if it does not reduce its price. Manufacturing has been asked to reduce its costs by $6 per unit. Improvements in manufacturing efficiency are expected to yield a net savings of $1.50 per MP3 player, but that is not enough. The chief engineer has proposed a new modular design that reduces the number of components to 50 and also simplifies testing. The newly designed MP3 player, called "New CE100" will replace CE100. The expected effects of the new design are as follows: a. Direct material cost for the new CE100 is expected to be lower by $2.20 per unit. b. Direct manufacturing labor cost for the New CE100 is expected to be lower by $0.50 per unit. c. Machining time required to manufacture the New CE100 is expected to be 20% less, but machine-hour capacity will not be reduced. d. Time required for testing the New CE100 is expected to be lower by 20%. e. Rework is expected to decline to 4% of New CE100 manufactured. f. Engineering-hours capacity will remain the same. Discussion Questions: Assume that the cost per unit of each cost driver for CE100 continues to apply to the New CE100. 1. Calculate Culter's manufacturing cost per unit of New CE100. 2. Will the new design achieve the per-unit cost-reduction targets that have been set for the manufacturing costs of New CE100? Show your calculations.