Paragon Corporation has an aggressive research and development (R&D) program and uses target costing to aid in the final decision to release new products to production. A new product is being evaluated. Market research has surveyed the potential market for this product and believes that its unique features will generate a total demand of 40,000 units at an average price of $250. Design and production engineering departments have performed a value analysis of the product and have determined that the total cost for the various value-chain functions using the existing process technology are as follows: E (Click the icon to view the total costs.) Management has a target profit percentage of 10% of sales. Production engineering indicates that a new process technology can reduce the manufacturing cost by 30%, but it will cost $220,000. Read the requirements. Requirement 1. Assuming the existing process technology is used, should the new product be released to production? Explain. The unit target cost is $ The expected average unit cost if the new product is released to production would be $ The new product be released to production because the expected average unit cost is the unit target cost. Requirement 2. Assuming the new process technology is purchased, should the new product be released to production? Explain. First, calculate the total cost savings if the new process technology is purchased. 0 Data Table The total cost savings will be $ If the new process technology is purchased, the expected average unit cost will be $ The new product V be released to production because the expected average unit cost is the unit target cost. Total Cost over Product Life 3,300,000 790,000 Value-Chain Function Research and Development Design Manufacturing Marketing Distribution Customer Service 3,000,000 400,000 1,400,000 710,000 9,600,000 Total Cost over Product Life Print Done