Ignite Products is a

price?taker.

The company produces large spools of electrical wire in a highlycompetitive? market; thus, it uses target pricing. The currentmarket price of the electric wire is

$700

per unit. The company has

$3,100,000

in average? assets, and the desired profit is a returnof

9?%

on assets. Assume all products produced are sold. The companyprovides the following? information:

Sales volume	110,000	units per year
Variable costs	$660	per unit
Fixed costs	$12,000,000	per year

If fixed costs cannot be? reduced, how much reduction invariable costs will be needed to achieve thedesired? target?

A.

$12,000,000

B.

$7,879,000

C.

$279,000

D. 72,600,000

2)

?Psari's, a company that sells fishing? nets, provides thefollowing information about its? product:

Targeted operating income	$60,000
Sales price per unit	6.00
Variable cost per unit	1.50
Total fixed costs	105,000

What is the contribution margin? ratio? (Round anyintermediate calculations and your final answer to twodecimal? places.)

A.

100?%

B.

25?%

C.

75?%

D.

125?%