Kerr Productions is a

priceminustaker.

The company produces large spools of electrical wire in a highly competitive market; thus, it uses target pricing. The current market price is

$ 825$825

per unit. The company has

$ 3 comma 000 comma 000$3,000,000

in average assets, and the desired profit is a return of

99%

on assets. Assume all products produced are sold. The company provides the following information:

Sales volume	100 comma 000100,000	units per year
Variable costs	$ 750$750	per unit
Fixed costs	$ 12 comma 000 comma 000$12,000,000	per year

Currently the cost structure is such that the company cannot achieve its profit objective and must cut costs. If fixed costs cannot be reduced, how much reduction in variable cost per unit will be needed to achieve the desired target? (Round your answer to the nearest cent.)

A.

reduction in variable cost per unit by $ 750.00$750.00

B.

reduction in variable cost per unit by $ 75.00$75.00

C.reduction in variable cost per unit by

$ 47.70$47.70

D.reduction in variable cost per unit by

$ 45.00$45.00