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2 years ago

Target Costing

Mathematics

1 answer:

Lynna [10]2 years ago

6 0

The target cost for Model J20 is $2000.

The required cost reduction is $30.

The total saving will be $30.3.

<h3>How to compute the cost?</h3>

The target cost will be:

= Sales price - (100% × Target cost)

= 400 - (100% × Y)

Y + Y = 400

2Y = 400

Y = 400/2 = 200

Target cost = $200

Therefore, the target cost is $200.

The required cost reduction will be:

= $230 - $200

= $30

The required cost reduction is $30.

The three engineering improvements together will be:

Direct labor reduction = 7.5

Additional inspection = 17

Injection molding = 5.8

Total savings = 30.3

The total savings is $30.3.

Learn more about cost on:

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