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Rush Industries, Inc. builds parts for large automated heavy equipment. The Vice President for Marketing...

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Rush Industries, Inc. builds parts for large automated heavy equipment. The Vice President for Marketing has determined that sales are dwindling for the firm's products because of aggressive pricing by competitors. Rush Industries sells the product for $775 whereas the competition's comparable part is selling in the $650 range. The VP for Marketing has determined that a price drop to $625 is necessary to regain market share and annual sales of 1,200 units. Data based on sales of 1,200 units is as follows: Budgeted Amount Actual Amount Cost Direct materials (sheet metal) 8,000 sq.ft. 10,000 sq.ft $9.66 per sq.ft. Direct labor 4,800 hrs. 5,000 hrs. 33.60 per hour per Machine setups 2,600 hrs. 2,800 hrs. 42.00 hour Mechanical assembly 3,200 hrs. 3,600 hrs. per 34.00 hour Problem 4.2 If a profit per unit of 35% is desired, the target cost would be O $406.25 O $271.25 $422.50 O $503.75

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