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Peppermint Kisses manufactures toothpaste. The company's current annual production and sales volume is 200,000 tubes. The variable cost making and selling each tube of toothpaste
Peppermint Kisses manufactures toothpaste. The company's current annual production and sales volume is 200,000 tubes. The variable cost making and selling each tube of toothpaste is $1.00. Shareholders expect a 12% annual return on the company's $300,000 of assets. QUESTION 1: Assume that Peppermint Kisses is a price taker and the current market price for a tube on toothpaste is $1.45. What are the company's annual target fixed costs? OOOOO $60,000 $254,000 $164,000 $126,000 $54,000 QUESTION 2: Assume annual fixed costs are $120,000. The company could spend an extra $44,000 on advertising to differentiate its product and gain more control over pricing. Assume no change in either the sales volume or previous cost structure (except for the addition of the $44,000), what would be the company's cost plus price? $2.00 per tube $1.40 per tube $1.64 per tube $1.82 per tube $1.00 per tube OO
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