Question

Required information [The following information applies to the questions displayed below.] 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 2 2 $ 117 /ea Video monitors 1 4 $ 29 /ea Motion detectors 3 6 $ 21 /ea Floodlights 2 7 $ 7 /ea Alarms 3 3 $ 14 /ea Wiring 720 ft. 1,120 ft. $ 0.1 /ft. Installation 16 hr 28 hr $ 12 /hr The ICU 100 sells for $930 installed, and the ICU 900 sells for $1,640 installed. Required: 1. What are the current profit margin percentages on both systems? 2. UR Safe’s management believes that it must drop the price on the ICU 100 to $870 and on the ICU 900 to $1,510 to remain competitive in the market. Recalculate profit margin percentages for both products at these price levels and then compute the target cost needed for each product to maintain the current profit margin percentages.

Answer 1

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