management at fox valley machine tool co is considering the development of a new aut 544906

Target Costing E 13. Management at Fox Valley Machine Tool Co. is considering the development of a new automated drill press called the AutoDrill. After conferring with the design engineers, the controller”s staff assembled the following data about this product: Target selling price $6,000 per unit Desired profit percentage 20% of total unit cost Projected unit demand 4,500 units Activity-based cost rates Materials handling 5% of direct materials and purchased parts cost Engineering $300 per unit for Auto Drill Production and assembly $50 per machine hour Delivery $570 per unit for Auto Drill Marketing $400 per unit for Auto Drill Per-unit data Direct materials cost $1,620 Purchased parts cost $200 Manufacturing labor Hours 6 Hourly labor rate $14 Assembly labor Hours 10 Hourly labor rate $15 Machine hours 30 1. Compute the product”s target cost. 2. Compute the product”s projected unit cost based on the design engineers” estimates. 3. Should management produce and market the Auto Drill? Defend your answer.