Tamarisk Company uses an activity-based costing system. It has the following manufacturing activity areas, related drivers used as allocation bases, and cost allocation rates. Cost
Activity Cost Driver Allocation Rate
Machine setup Number of setups $50
Material handling Number of parts 0.6
Machining Machine hours 24
Assembly Direct labour hours 20
Inspection Number of finished units 12
During the month, 80 units were produced, requiring 3 setups. Each unit consisted of 20 parts and used 1.7 direct labour hours and 1.25 machine hours. Direct materials cost $120 per finished unit. All other manufacturing costs are classified as conversion costs. ABC costs for research and marketing costs are $160 per unit. All other nonmanufacturing ABC costs are $360 per unit.
Calculate the manufacturing cost per unit for the period.
Calculate the total cost (manufacturing and non-manufacturing costs) per unit for the period.
Suppose Tamarisk Company's managers want to implement target costing. Under target costing, the managers need to determine the amount of cost savings that must be achieved to earn a desired level of profit. If th๑y must set a competitive price of $731.88 and require a 10% profit based on th๑ total cost calculated in the previou part, howmuch cost savings must they g๑nerate?