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Helot Co develops and sells computer games. it is well known for launching innovative and interactive role-playing games and its new releases are always eagerly anticipated by the gaming community. Customers value the technical excellence of the games and the durability of the product and packaging. Helot Co has previously used a traditional absorption costing system and hill cost plus pricing to cost and price its products. It has recently recruited a new nance director who believes the company would benet from using target costing. He is keen to try this method on a new game concept called Spartan, which has been recently approved. After discussion with the board, the nance director undertook some market research to nd out customers' opinions on the new game concept and to assess potential new games offered by competitors. The results were used to establish a target selling price of $45 for Spartan and an estimated total sales volume of 350,000 units. Helot Co wants to achieve a target prot margin of 35%. The nance director has also begun collecting cost data for the new game and has proiected the following: Production costs per unit 3 Direct material 3 '00 Direct labour 2-50 Direct machining 5-05 Set-up 0-45 Inspection and testing 4'30 Total non-production costs 5'000 Design (salaries and technology) 2,500 Marketing consultants [5'00 Distribution 1,400 Which of the following statements would the nance director have used to explain to Helot Co.'s board what the benets were of adopting a target costing approach so early in the game's life-cycle? (I) Costs will be split into material. system. and delivery and disposal categories for improved cost reduction analysis (2) Customer requirements for quality, cost and timescales are more likely to be included in decisions on product development (3) Its key concept is based on how to turn material into sales as quickly as possible in order to maximize net cash (4) The company will focus on designing out costs prior to production, rather than cost control during live production A l, 2 and 4 h