Exercise 4-43 Target Costing and Purchasing Decisions (LO 4-3) Mira Mesa Appliances makes and sells kitchen equipment for offices and hotel rooms. Mira Mesa management believes that a new model of refrigerator made out of a synthetic material would sell well at a price of $430 per unit. Labor costs are estimated at $49 per unit and overhead costs would be $58 per unit. The major uncertainty is the price of the synthetic material. Mira Mesa is in negotiations with several suppliers for the material. Because of the risk associated with the new product, Mira Mesa will only proceed if the estimated return is at least 20 percent of the selling price. Required: What is the most Mira Mesa can pay for the synthetic material per unit (refrigerator) and meet its profitability goal? (Do not round intermediate calculations.) Highest material price per unit Exercise 4-44 Target Costing (LO 4-3) Kearney, Inc., makes kitchen tools. Company management believes that a new model of coffee grinder would sell well at a price of $82.60. The company estimates unit materials costs to be $13.00 for the model, and overhead costs would average $39.70 per unit. The local wage rate for direct labor is $21.00 per hour. Kearney has a goal of earning an operating profit of 40.00 percent of manufacturing costs for each of its products. Required: What direct labor-hour input (hours per unit) could Kearney allow and still achieve its profit goal? (Round your answer to 2 decimal places.) Maximum direct labor time per unit hours