22-

Ignite Products is a price - taker. The company produces large spools of electrical wire in a highly competitive market; thus, it uses target pricing. The current market price of the electric wire is $700 per unit. The company has $3,000,000 in average assets, and the desired profit is a return of 8% on assets. Assume all products produced are sold. The company provides the following information: Sales volume Variable costs Fixed costs 110,000 units per year $660 $12,000,000 per year per unit If fixed costs cannot be reduced, how much reduction in variable costs will be needed to achieve the desired target? A. $240,000 B. $72,600,000 C. $12,000,000 D. $7,840,000