Question#1 Hardy Electronics plans to design, develop and produce a gadget. A survey by the marketing department reveals that similar product in the market sells at a price of $35 per unit and believes that the company would be able to sell 50,000 units per year at a competitive price. The company believes that it needs to invest $2,500,000 in the design and development of the gadget and expects to have a 20% return on investment. Required: A. Calculate the Target Cost Per unit of the new gadget B. Discuss under what circumstances companies use Target Costing Question#2 Magner, Inc., uses the absorption costing approach to cost-plus pricing to set prices for its products. The company has invested $400,000 in this product and expects a return on investment of 9%. Based on a budgeted sale of 34,000 units next year, the budgeted costs are as below: Per Unit Total Direct Materials $27.30 Direct Labor 15.40 Variable Manufacturing Overhead 14.30 Fixed Manufacturing Overhead $163,200 Variable Selling & Administrative Expenses 12.60 Fixed Selling & Administrative Expenses $380,800 Required: a. Calculate the unit product cost b. Compute the markup required to achieve the desired ROI C. Compute the target-selling price to achieve desired profit