Laser Impressions, Inc., manufactures color laser printers. The J20 model currently sells for $700 and has a
Question:
Laser Impressions, Inc., manufactures color laser printers. The J20 model currently sells for $700 and has a total product cost of $560, as follows:
Direct materials | $400 |
Direct labor | 110 |
Factory overhead | 50 |
Total | $560 |
The competitive retail price of color laser printers of this type is estimated to drop to $670 next year. Laser Impressions has set a target cost to maintain its historical profit margin percentage over the cost of the product. Engineers have provided the following cost-cutting ideas:
Buy a plastic printer cover with snap-on assembly, rather than screws. This will reduce the amount of direct labor by 9 minutes per unit.
Add an inspection step that will add six minutes per unit of direct labor but reduce the cost of materials by $14 per unit.
Reduce injection molding machine cycle time from four minutes to three minutes per part. Thirty percent of the direct labor and 45% of the factory's overhead are related to the operation of injection molding machines.
The direct labor rate is $46 per hour.
to. Determine the target cost for the Model J20 assuming that the historical markup on the product cost and selling price is maintained. Round your final answer to two decimal places.
Ps
b. Determine the cost reduction required. Enter as a positive number. Round your final answer to two decimal places.
Ps
C. Evaluate the three engineering improvements together to determine if the required cost reduction (derivation) can be achieved. Enter all amounts as positive numbers. Don't round the intermediate calculations, but round your final answers to two decimal places.
1. Reduction of direct labor | Ps |
2. Additional inspection | Ps |
3. Improved injection molding productivity | Ps |
Total savings | Ps |
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren