Chapter 25 Homework, 7 Correcting

Target Costing Laser Impressions Inc. manufactures color laser printers. Model J20 presently sells for $300 and has a product cost of $240, as follows: reduction ideas: 1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit. 2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $6 per unit. The direct labor rate is $21 per hour. a. Determine the target cost for Model J20, assuming that the historical markup on product cost and selling price are maintained. Round your final answer to two decimal places. X per unit b. Determine the required cost reduction. Round your final answer to two decimal places. X per unit Feedback Check My Work b. Subtract the target product cost from the total product cost