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.
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