Heisler Cameras, Inc., manufactures two models of cameras. Model

Heisler Cameras, Inc., manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Heisler uses an activity-based costing system. The following are the relevant cost data for the previous month. 

Direct Cost per Unit Direct materials Direct labor Estimated Cost Model ZM Model DS $20 28 Cost Driver Number of units N

Heisler’s facility has the capacity to operate 4,500 machine hours per month. 


a. Compute the cost per unit for each product.

b. The current market price for products comparable to Model ZM is $135 and for DS is $47. If Heisler sold all of its products at the market prices, what was its profit or loss for the previous month?

c. A market expert believes that Heisler can sell as many cameras as it can produce by pricing Model ZM at $130 and Model DS at $45. Heisler would like to use those estimates as its target prices and have a profit margin of 20 percent of target prices. What is the target cost for each product?

d. Is there any way for the company to reach its target costs? 


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