UR Safe Systems installs home security systems. Two of its systems, the ICU 100 and the ICU 900, have these characteristics:

Design Specifications ICU 100 ICU 900 Cost Data

Video cameras 2 3 $119/ea

Video monitors 1 3 $35/ea

Motion detectors 1 4 $19/ea

Floodlights 3 5 $5/ea

Alarms 5 3 $16/ea

Wiring 740ft. 1,140ft. $0.3/ft.

Installation 12hr 30hr $12/hr

The ICU 100 sells for $950 installed, and the ICU 900 sells for $1,660 installed.

Part 1

Required:

1. What are the current profit margin percentages on both systems?

2. UR Safe's management believes that it must drop the price on the ICU 100 to $890 and on the ICU 900 to $1,530 to remain competitive in the market. Recalculate profit margin percentages for both products at these price levels and then compute the target cost needed for each product to maintain the current profit margin percentages.