Paper Tiger Stationary Company Is a Price-Taker and Uses Target

question 56

Multiple Choice

Paper Tiger Stationary Company is a price-taker and uses target pricing.Refer to the following information: $$\begin{array} { | l | l | l | } \hline \text { Production volume } & 501,000 & \text { units per year } \\\hline \text { Market price } & \$ 30 & \text { per unit } \\\hline \text { Desired operating income } & 16 \% & \text { of total assets } \\\hline \text { Total assets } & \$ 1,600,000 & \\\hline\end{array}$$ What is the target full product cost per year? Assume all units produced are sold.

• A) $18,030,000
• B) $17,774,000
• C) $25,600,000
• D) $10,217,000

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Definitions:

University

An educational institution designed for instruction, examination, or both, of students in many branches of advanced learning.

Monopolistic Distributor

An intermediary that possesses the exclusive power to distribute a product or service within a particular market, influencing prices and availability.

Marginal Cost

The investment required to manufacture an extra unit of a good or service.

Mineral Water

Water that contains minerals or other dissolved substances that alter its taste or give it therapeutic value, usually obtained from wells or springs.