Problem 19.2A (Static) Activity-Based Management and Target Costing (LO19-2, LO19-3, LO19-4, LO19-5) allapur Company manufactures two products: KAP1, which sells for $120; and QUIN, which sells for $220. Estimated cost and roduction data for the current year are as follows. addition, fixed manufacturing overhead is estimated to be $2,000,000 and variable overhead is estimated to equal $3 per direct abor hour. Kallapur desires a 15 percent return on sales for all of its products. lequired: . Calculate the target cost for both KAP1 and QUIN. -1. Estimate the total manufacturing cost per unit of each product if fixed overhead costs are assigned to products on the basis of stimated production in units. -2. Which of the products is earning the desired return? -1. Recalculate the total manufacturing cost per unit if fixed overhead costs are assigned to products on the basis of direct labor ours. -2. Which of the products is earning the desired return? . On the basis of the confusing results of parts b and c, Kallapur's manager decides to perform an activity analysis of fixed overhead. he results of the analysis are as follows. d-1. Estimate the total manufacturing cost per unit of each product if activity-based costing is used for assigning fixed overhead costs. d-2. Under this method, which product is earning the desired return? -1. Kallapur's production manager believes that design changes would reduce the number of set-ups required for QUIN to 25 . Fixed verhead costs for set-ups would remain unchanged. What will be the impact of the design changes on the manufacturing costs of Doth products? -2. Which of the products will earn the desired return? -1. An alternative to the design change is to purchase a new machine that will reduce the number of set-ups for KAP1 to 20 and the number of set-ups for QUIN to 80 . The machine will also reduce fixed set-up costs to $200,000. Calculate the manufacturing costs for ach product if the machine is purchased. -2. Should Kallapur purchase the new machine