Meson Production is a price-taker. It produces large spools of electrical wire in a highly competitive market, so it practices target pricing. The current market price of the electric wire is $780 per unit. The company has $3,000,000 in assets and its shareholders expect a return of 6% on assets. The company provides the following information:

If variable costs cannot be reduced, how much reduction in fixed costs will be needed to achieve the profit target?

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Sales volume Variable costs Fixed costs 100,000 $700 $12,000,000 units per year per unit per year Sales volume Variable costs Fixed costs 100,000 $700 $12,000,000 units per year per unit per year

Answer rating: 100% (QA)

Variable costs 700 per unit 70000000 Fixed costs 12... View the full answer