Origami Company Is a Price-Taker and Uses Target Pricing -
How Much Is the Target Full Cost Per Unit

question 136

Multiple Choice

Origami Company is a price-taker and uses target pricing. Please refer to the following information:
$\begin{array}{|l|r|r|}\hline \text { Production volume } & 500,000 & \text { Units per year } \\\hline \text { Market price } & \$ 24.00 & \text { Per unit } \\\hline \text { Desired operating profit } & 12 \% & \text { Of total asset } \\\hline \text { Total assets } & \$ 12,500,000 & \\\hline\end{array}$
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How much is the target full cost per unit? (Please round to nearest cent.)

• A) $21.00
• B) $24.00
• C) $22.67
• D) $19.33

Understand the role of advertising and product differentiation in monopolistic competition.

Analyze factors contributing to excess capacity in monopolistic competition.

Identify conditions under which firms in monopolistic competition can earn profits in the short run but break even in the long run.

Understand strategic considerations in different market structures including monopolistic competition and oligopoly.

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Definitions:

Leased

A contractual arrangement where an owner of a property allows another party to use the property for a specified time in exchange for periodic payments.

Ownership

The legal right or title to possess, use, control, and dispose of an asset, property, or resource, recognized by law.

Purchasing

The process of sourcing and acquiring goods and services needed by an organization or individual.

Valid Gift

A legal principle referring to a voluntarily transfer of property or a right from one individual to another, without any consideration or payment.