14 rica company is a price taker and uses target pricing please refer to the followi 4307766

14 rica company is a price taker and uses target pricing please refer to the followi 4307766

14) Rica Company is a price-taker and uses target pricing. Please refer to the following information:

Production volume

600,000

Units per year

Market price

$30

Per unit

Desired operating income

15%

Of total assets

Total assets

$13,900,000

Variable cost per unit

$18

Per unit

Fixed cost per year

$5,600,000

Per year

With the current cost structure, Rica cannot achieve its profit goals. It will have to reduce either the fixed costs or the variable costs. Assuming that fixed costs cannot be reduced, what will be the target variable costs per year? Assume all units produced are sold.

A) $10,315,000

B) $5,115,000

C) $5,600,000

D) $5,200,000

15) Rica Company is a price-taker and uses target pricing. Refer to the following information:

Production volume

600,000

units per year

Market price

$30

per unit

Desired operating income

15%

of total assets

Total assets

$13,900,000

Variable cost per unit

$18

per unit

Fixed cost per year

$5,600,000

per year

With the current cost structure, Rica cannot achieve its profit goals. It will have to reduce either the fixed costs or the variable costs. Assuming that fixed costs cannot be reduced, what will be the target variable costs per unit per year? Assume all units produced are sold. (Round your answer to the nearest cent.)

A) $26.53

B) $9.33

C) $17.19

D) $18

16) Star Stationery Company is a price-taker and uses target pricing. Please refer to the following information:

Production volume

300,000

units per year

Market price

$3

per unit

Desired operating income

15%

of total assets

Total assets

$2,000,000

How much is the target full product cost per year? Assume all units produced are sold.

A) $900,000

B) $600,000

C) $300,000

D) $390,000

17) Star Stationery Company is a price-taker and uses target pricing. The company has just done an analysis of its revenues, costs and desired profits, and has calculated its target full product cost. Please refer to the following information:

Target full product cost

$500,000

per year

Actual fixed cost

$280,000

per year

Actual variable cost

$2

per unit

Production volume

150,000

units per year

Actual costs are currently higher than target full product cost. Assuming that variable costs are dependent on commodity prices and cannot be reduced, how much is the target fixed cost?

A) $180,000

B) $300,000

C) $200,000

D) $500,000

18) Star Stationery Company is a price-taker and uses target pricing. The company has just done an analysis of its revenues, costs, and desired profits, and has calculated its target full product cost. Please refer to the following information:

Target full product cost

$500,000

per year

Actual fixed cost

$280,000

per year

Actual variable cost

$2

per unit

Production volume

150,000

units per year

Actual costs are currently higher than target full product cost. Assuming that fixed costs cannot be reduced, how much is the target variable cost?

A) $180,000

B) $300,000

C) $220,000

D) $500,000

19) Star Stationery Company is a price-taker and uses target pricing. The company has just done an analysis of its revenues, costs, and desired profits, and has calculated its target full product cost. Refer to the following information:

Target full product cost

$500,000

per year

Actual fixed cost

$280,000

per year

Actual variable cost

$2

per unit

Production volume

150,000

units per year

Actual costs are currently higher than target full product cost. Assuming that fixed costs cannot be reduced, how much is the target variable cost per unit?

A) $1.20

B) $1.47

C) $1.33

D) $3.33

20) Fantabulous Products sells 2,000 kayaks per year at a price of $450 per unit. Fantabulous sells in a highly competitive market and uses target pricing. The company has $1,000,000 of assets and the shareholders wish to make a profit of 18% on assets. How much is the target full product cost?

A) $1,800,000

B) $720,000

C) $1,062,000

D) $712,500

21) Fantabulous Products sells 2,000 kayaks per year at a price of $450 per unit. Fantabulous sells in a highly competitive market and uses target pricing. The company has $1,000,000 of assets and the shareholders wish to make a profit of 18% on assets. Fixed costs are $500,000 per year and cannot be reduced. How much is the target variable costs?

A) $265,000

B) $500,000

C) $720,000

D) $220,000

22) Peacock Inc. sells 2,500 kayaks per year at a price of $500 per unit. It sells in a highly competitive market and uses target pricing. The company has calculated its target full product cost at $820,000 per year. Fixed costs are $350,000 per year and cannot be reduced. How much is the target variable cost per unit assuming units sold are equal to units produced?

A) $188

B) $328

C) $360

D) $172

23) Fantabulous Products sells 2,000 kayaks per year at a price of $450 per unit. Fantabulous sells in a highly competitive market and uses target pricing. The company has $1,000,000 of assets and the shareholders wish to make a profit of 18% on assets. Variable cost is $200 per unit and cannot be reduced. How much is the target fixed costs?

A) $265,000

B) $720,000

C) $180,000

D) $320,000

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