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Styles Question 38. 3 1 1 8 w 1 7 1 Target Costing in a...

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Accounting

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Styles Question 38. 3 1 1 8 w 1 7 1 Target Costing in a Service Firm UR Safe Systems installs home security systems. Two of its systems, the ICU 100 and the ICU 900, have these characteristics: Design Specifications ICU 100 ICU 900 Cost Data Video cameras 1 $150/ea Video monitors $75/ea Motion detectors $15/ea Floodlights $8/ea Alarms 2 $15/ea Wiring 700 ft. 1,100 ft. $0.10/ft. Installation 16 hr 26 hr $20/hr The ICU 100 sells for $810 installed, and the ICU 900 sells for $1,520 installed. Required 1. What are the current gross profit margin percentages on both systems? 2. UR Safe's management believes that it must drop the price on the ICU 100 to $750 and on the ICU 900 to $1,390 to remain competitive in the market. Recalculate gross profit margin percentages for both products at these price levels and then compute the target cost needed for each product to maintain the current gross profit margin percentages. 3. Describe two ways that UR Safe could cut its costs to get the gross profit margins back to their original levels

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