Rica Company is a price-taker and uses target pricing. Refer to the following information:

With the current cost structure, Rica 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, how much will be the target fixed costs per year?

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Production volume Market price Desired operating income Total assets Variable cost per unit Fixed cost per year 600,000 $30 15% $13,900,000 $18 $5,600,000 units per year per unit of total assets per unit per year Production volume Market price Desired operating income Total assets Variable cost per unit Fixed cost per year 600,000 $30 15% $13,900,000 $18 $5,600,000 units per year per unit of total assets per unit per year

Answer rating: 100% (QA)

Sales 1800000000 Less Desired Profit 1390000... View the full answer