question 10

Question 10 (3 points) Lincoln Manufacturing is a price-taker. Lincoln produces specialized wire in a highly competitive market; thus, the company uses target pricing. The current market price of the electric wire is $760 per unit. The company has $3,200,000 in average assets, and the desired profit is a return of 5% on assets. Assume all products produced are sold. The company provides the following information: Sales volume 110,000 units per year Variable costs $660 per unit Fixed costs $12,000,000 per year If variable costs cannot be reduced, how much reduction in fixed costs will be needed to achieve the profit target? $12,000,000 $12,160,000 $1,160,000 O $1,000,000