ABC Products is a price-taker and uses target pricing. Company has just done an analysis of their revenues, costs and desired profits, and has calculated its target full product cost. Please refer to the following information:

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

Target full product cost Actual fixed cost Actual variable cost Production volume $500,000 $280,000 $2 150,000 per year per year per unit units per year