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Home Q & A Board Other Fields Homework Help Business Accounting
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7 years ago
Trina Productions is a price-taker. The company produces large spools of electrical wire in a highly competitive market; thus, it uses target pricing. The current market price of the electric wire is $800 per unit. The company has $3,100,000 in average assets, and the desired profit is a return of 6% on assets.  Assume all products produced are sold. The company provides the following information:

Sales volume   110,000   units per year
Variable costs   $690   per unit
Fixed costs   $13,000,000   per year

If fixed costs cannot be reduced, how much reduction in variable costs will be needed to achieve the desired target?
A) $75,900,000
B) $13,000,000
C) $1,086,000
D) $186,000
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
Authors:
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Mrgo-breedMrgo-breed
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Deprecated Author
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#2
7 years ago
Will mark this subject solved, thanks
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#3
7 years ago
Happy to help Smiling Face with Open Mouth
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#4
4 years ago
Thanks
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