Target costing

House it Co produces rabbit hutches. It is about to launch a new top of the range hutch which it believes can be hold for S125, House it Co demands a margin of 25% on sales Cost information for the new hutch is as follows: Timber - The hutch needs 10 metres (m) of good quality planed timber. House it Co can acquire this at a cost of $48. Felt roofing material - 2m are required. Roofing material costs $17.50/m Wire - 1 m of wire is needed at a cost of $1.50 per metr Labour - Labour is paid at a rate of $7 / hour, Variable overhead - These will be incurred at a rate of $1.50 per labour hour S Required What is the expected cost to make the hutch? O $93.00 O $98.50 O $101.50 O $125.00 According to them correct answer is $ 101.50 There is no information for the labor hours being 2 hours so how come they derived the answer to be $ 101.50 Thank u in advance