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Question - 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
3
$107/ea
Video monitors
5
$21/ea
Motion detectors
4
$13/ea
Floodlights
$7/ea
Alarms
$12/ea
Wiring
660 ft.
1,060 ft.
$0.2/ft.
Installation
12 hr
22 hr
$11/hr
The ICU 100 sells for $850 installed, and the ICU 900 sells for $1,560 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 $790 and on the ICU 900 to $1,430 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.
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