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Solve profit margin percentages for both products

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Reference no: EM132543210

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                       3                     $119/ea

Video monitors                    1                           3                      $35/ea

Motion detectors                    1                         4                        $19/ea

Floodlights                               3                         5                       $5/ea

Alarms                                    5                          3                        $16/ea

Wiring                                    740ft.                          1,140ft.             $0.3/ft.

Installation                                12hr                          30hr                    $12/hr

The ICU 100 sells for $950 installed, and the ICU 900 sells for $1,660 installed.

Required:

Question 1. What are the current profit margin percentages on both systems?

Question 2. UR Safe's management believes that it must drop the price on the ICU 100 to $890 and on the ICU 900 to $1,530 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.

Reference no: EM132543210

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