Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ignite Products is a price - taker. The company produces large spools of electrical wire in a highly competitive market; thus, it uses target pricing.
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 $800 per unit. The company has $3,000,000 in average assets, and the desired profit is a return of 9% on assets. Assume all products produced are sold. The company provides the following information: Sales volume Variable costs Fixed costs 100,000 units per year $690 $14,000,000 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. $270,000 B. $69,000,000 C. $14,000,000 D. $3,270,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started