PROBLEM 5: Target Costing With its booming server business, your client has increased the scope of its services to now sell insurance on its server farm. Unlike a traditional feeforservice model, your client charges based on usage and fees incurred. The monthly rate is determined by the cost per enrolled company within an industry vertical. The average cost of insurance in the Tech sector is $368/month, irrespective of the amount of data storeantrisk. 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: Projected # of Gigabytes stored # of Customers Customers Average Monthly Costs 1 -t0- 4 45,688 48,977 $11,147,872 5 -to 14 82,456 84,663 $10,059,632 15 'to' 19 95,873 95,887 $8,436,824 20 'to' 24 66,246 67,882 $9,539,424 25 'to' 34 133,496 132,554 $26,432,208 35 'to' 44 166,876 175,466 $38,882,108 45 'to' 54 85,496 90,899 $22,741,936 55 'to' 64 99,624 101,923 $28,691,712 55 'to' 74 156,288 161,559 $48,918,144 75 'to' 84 67,895 72,465 $33,132,760 85 and above 23,499 26,849 $24,036,475 1,023,437 1,059,124 $262,069,095 i. Calculate the target cost required to maintain current market share & prot per enrollee. ii. Costs in the server industry applicable to the Company and HP are expected to increase 6% next year. The Company expects competitors to raise prices by $15, to $340. What's the new target cost assuming that the Company wants to maintain same prot per customer? [1.0 page limit]