Discourse Stationery Company Is a Price-Taker and Uses Target Pricing

question 141

Multiple Choice

Discourse Stationery Company is a price-taker and uses target pricing.The company has completed an analysis of its revenues,costs,and desired profits and has calculated its target full product cost.Refer to the following information: $$\begin{array} { | l | l | l | } \hline \text { Target full product cost } & \$ 500,000 & \text { per year } \\\hline \text { Actual fixed cost } & \$ 270,000 & \text { per year } \\\hline \text { Actual variable cost } & \$ 2 & \text { per unit } \\\hline \text { Production volume } & 140,000 & \text { units per year } \\\hline\end{array}$$ Actual costs are currently higher than target full product cost.Assume all products produced are sold.Assuming that variable costs are dependent on commodity prices and cannot be reduced,what is the target fixed cost?

• A) $230,000
• B) $280,000
• C) $220,000
• D) $500,000

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Definitions:

Motion to Dismiss

A legal request asking a court to dismiss a case mainly on the grounds that even if all facts claimed are true, there is no legal basis for a lawsuit.

Affidavit

A written statement confirmed by oath or affirmation, used as evidence in court.

Affirmative Defense

A defense in which the defendant introduces evidence, which, if found to be true, will negate a plaintiff's claim, even if the allegations are true.

Memorandum of Law

A detailed written statement prepared by legal counsel, arguing a specific legal issue or point, often submitted in support of motions or during trial preparations.