Target Costing in a Service Firm UR Safe Systems installs home security systems. Two of it...

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:

The ICU 100 sells for $810 installed, and the ICU 900 sells for $1,520 installed.

Required

1. What are the current profit margins on both systems?

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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 profit margins for both products at these price levels.

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3. Describe two ways that UR Safe could cut its costs to get the profit margins back to their original levels.