Haskins Products sells 2, 500 kayaks per year at a sales price of $450 per unit. Haskins sells in a highly competitive market and uses target pricing. The company has calculated its target full product cost at $720, 000 per year. Total variable costs are $330, 000 per year and cannot be reduced. Assume all products produced are sold. What are the target fixed costs?

A. $1, 125, 000

B. $405, 000

C. $390, 000

D. $330, 000

2.

Fox, Inc. manufactures and sells pens for $7.00 each. Walton Corp. has offered Fox, Inc. $3.00 per pen for a one - time order of 3, 500 pens. The total manufacturing cost per pen, using absorption costing, is $1.00 per unit and consists of variable costs of $0.75 per pen and fixed overhead costs of $0.25 per pen. Assume that Fox, Inc. has excess capacity and that the special pricing order would not adversely affect regular sales. What is the change in operating income that would result from accepting the special pricing order?

A. decrease of $ 7, 875

B. increase of $ 7, 875

C. decrease of $ 14, 000

D. increase of $ 14, 000

25. Fox, Inc. manufactures and sells pens for $7.00 each. Walton Corp. has offered Fox, Inc. $3.00 per pen for a one - time order of 3, 500 pens. The total manufacturing cost per pen, using absorption costing, is $1.00 per unit and consists of variable costs of $0.75 per pen and fixed overhead costs of $0.25per pen. Assume that Fox, Inc. has excess capacity and that the special pricing order would not adversely affect regular sales. What is the change in operating income that would result from accepting the special pricing order?

A. decrease of $ 7, 875

B. increase of $ 7, 875

C. decrease of $ 14, 000

D. increase of $ 14, 000

26. Willow Golf Course is planning for the coming golfing season. Investors would like to earn a 15 % return on the company's $ 60, 000, 000of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $32, 000, 000 for the season. About 600, 000 rounds of golf are expected to be played each year. Variable costs are about $16 per round of golf. Willow golf course is a price - taker and will not be able to charge more than its competitors, who charge $75per round of golf. Compute the operating profit that will be earned.

A. $3, 400, 000

B. $9, 000, 000

C. $86, 600, 000

D. $45, 000, 000