Reference no: EM132546382

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                   5                           $115/ea

Video monitors                            2                        1                      $27/ea

Motion detectors                        5                          3                    $19/ea

Floodlights                                4                           2                     $9/ea

Alarms                                      2                         1                      $14/ea

Wiring                                      600ft.               1,000ft.                    $0.2/ft.

Installation                                  14hr                 14hr                       $14/hr

The ICU 100 sells for $910 installed, and the ICU 900 sells for $1,620 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 $850 and on the ICU 900 to $1,490 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.