Inc, manufactures colorlaser prieters. Model 320 presently selis for $525 and ha
ID: 2521951 • Letter: I
Question
Inc, manufactures colorlaser prieters. Model 320 presently selis for $525 and has a total product cost of $420, as folews Direct materals Direct lebr Fectory overhead n in estimated that the competsive seling ptice for celer laser printers of this type w drop to $500 next year Laser Impressions hasestabshed a tanget cost to maintain its historical markuo percentage on product cost Engineers heve arevided te ather than with soews. This will reduce the emount of direct labor by 9 minutes per unit of the inpection meleing machne fram feur ts three minutes per part. Thity percent of the direct abor and o% of the factary overhead are reilated to runsing ngection moiing me The dinedt labor rate is 534 per hour Oetermine the target coat for Model 320 assuming that the historical makup en produst cest and seing price are maintaned Round your nal as a positive number Round your lsnwer to two dacme Evalute the three t engineeing Do sot eund intenieExplanation / Answer
Solution- A:
Target cost for Model 320: $400
Selling Price for Laser Printer: $525
Total Cost: $420
Current Mark-up: $525 - $420 = $105
Current Mark-up % = 105/525= 20%
New Selling Price= $500
Mark-up required (20%) = $100
Minimum Target Cost= %500 - $100 = $400
Solution- B:
Current Cost = $420
Target cost= $400
Required cost reduction = $420 - $400= $20