Fowler Company Is a Price-Taker and Uses Target Pricing With the Current Cost Structure,Fowler Cannot Achieve Its Profit Goals

question 37

Multiple Choice

Fowler Company is a price-taker and uses target pricing.Refer to the following information: $$\begin{array} { | l | l | l | } \hline \text { Production volume } & 500,000 & \text { units per year } \\\hline \text { Market price } & \$ 30 & \text { per unit } \\\hline \text { Desired operating income } & 17 \% & \text { of total assets } \\\hline \text { Total assets } & \$ 13,700,000 & \\\hline \text { Variable cost per unit } & \$ 17 & \text { per unit } \\\hline \text { Fixed cost per year } & \$ 5,600,000 & \text { per year } \\\hline\end{array}$$ With the current cost structure,Fowler 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) $5,471,000
• B) $5,600,000
• C) $12,400,000
• D) $10,200,000

Identify and explain the usage of different heuristics in organizational decision-making.

Recognize the role of superstition (randomness error) in personal and organizational decisions.

Describe bounded rationality and its implications for decision-making processes.

Distinguish between bounded rationality and complete rationality.

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Definitions:

Centralized Organizations

Organizations where decision-making authority is concentrated at the top levels of management.

Decentralized Organizations

Organizations that distribute power away from a central authority, often featuring a more spread out decision-making process.

Values-based Ethics

An ethical approach that is rooted in the core values and principals of an individual or organization, guiding decision-making and actions.

Explicit Mission Statement

A clear, concise statement that defines an organization's purpose and primary objectives.