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Home Q & A Board Other Fields Homework Help Business Accounting
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7 years ago
Acton Company is a price-taker and uses target pricing. Refer to the following information:

Production volume   602,000    units per year
Market price   $30    per unit
Desired operating income   17%    of total assets
Total assets   $13,700,000   
Variable cost per unit   $17    per unit
Fixed cost per year   $5,500,000    per year

With the current cost structure, Acton cannot achieve its profit goals. It will have to reduce either the fixed costs or the variable costs. Assuming that variable costs cannot be reduced, what are the target fixed costs per year? Assume all units produced are sold.
A) $10,234,000
B) $12,560,000
C) $5,500,000
D) $5,497,000
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
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Deprecated Author
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#2
7 years ago
Makes perfect sense, thx
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