PROBLEM 5: Target Costing With its booming server business, your client has increased the scope of its services to now sell insurance on its scrver farm. Unlike a traditional fce-for-scrvice model your client charges bascd on usage and fees incurred. The monthly rate is determined by the cost per cnrolled company within an industry vertical The average cost of insurance in the Tech sector is S368/month irrespective of the amount of data stored/at-risk. HP wants to enter and offer a similar plan for Tech sector companies for $325/month. Your client wants to maintain its position and increase market share. Latest data on enrollments is as follows: Projectedof Customers Average Monthly Costs Gigabytes slorcd # of CustomcrS S11.147,872 4 45,688 48.977 -to 14 -LO- 82,456 $10.059,632 84,663 19 -to 95.873 95.887 $8.436.824 20 24 -to 66.246 67,882 $9,539,424 25 34 -to- 132.554 133,496 $26.432.208 35 44 -t0- 166.876 $38,882,108 175,466 45 54 to- 85,496 $22.741,936 90.899 55 to. $28.691,712 99.624 101.923 65 7A to- $48,918.144 156,288 161,559 75 84 Jo- 72.465 $33,132,760 67,895 $24.086.475 85 and above 23.499 26.849 $262.069,095 1,023.437 1.059.124 i. Calculate the target cost required to maintain current market share & profit per enrollee. . Costs in the scrver industry applicable to the Company and IIP are expected to increase 6% next year. The Company expecls compcitors to raisc prices by 15 o S340 Wha's the new target cost assuming that the Company wants to maintain same profit per customer? [1.0 page limit] PROBLEM 5: Target Costing With its booming server business, your client has increased the scope of its services to now sell insurance on its scrver farm. Unlike a traditional fce-for-scrvice model your client charges bascd on usage and fees incurred. The monthly rate is determined by the cost per cnrolled company within an industry vertical The average cost of insurance in the Tech sector is S368/month irrespective of the amount of data stored/at-risk. HP wants to enter and offer a similar plan for Tech sector companies for $325/month. Your client wants to maintain its position and increase market share. Latest data on enrollments is as follows: Projectedof Customers Average Monthly Costs Gigabytes slorcd # of CustomcrS S11.147,872 4 45,688 48.977 -to 14 -LO- 82,456 $10.059,632 84,663 19 -to 95.873 95.887 $8.436.824 20 24 -to 66.246 67,882 $9,539,424 25 34 -to- 132.554 133,496 $26.432.208 35 44 -t0- 166.876 $38,882,108 175,466 45 54 to- 85,496 $22.741,936 90.899 55 to. $28.691,712 99.624 101.923 65 7A to- $48,918.144 156,288 161,559 75 84 Jo- 72.465 $33,132,760 67,895 $24.086.475 85 and above 23.499 26.849 $262.069,095 1,023.437 1.059.124 i. Calculate the target cost required to maintain current market share & profit per enrollee. . Costs in the scrver industry applicable to the Company and IIP are expected to increase 6% next year. The Company expecls compcitors to raisc prices by 15 o S340 Wha's the new target cost assuming that the Company wants to maintain same profit per customer? [1.0 page limit]