Origami Company Is a Price-Taker and Uses Target Pricing -
with the Current Cost Structure, Origami Cannot Achieve Its

question 80

Multiple Choice

Origami Company is a price-taker and uses target pricing. Please refer to the following information:
$$\begin{array} { | l | r | r | } \hline \text { Production volume } & 500,000 & \text { Units per year } \\\hline \text { Narket price } & \$ 24.00 & \text { Per unit } \\\hline \text { Pesired aperating profit } & 12 \% & \text { Of total assets } \\\hline \text { Tatal assets } & \$ 12,500,000 & \\\hline \text { Varinble edst per unit } & \$ 17.00 & \text { Per unit } \\\hline \text { Fixed cost per year } & \$ 3,000,000 & \text { Per year } \\\hline\end{array}$$
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With the current cost structure, Origami 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 the target fixed costs per year be?

• A) $2,000,000
• B) $1,500,000
• C) $2,500,000
• D) $800,000

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Definitions:

Serotonin

A neurotransmitter that plays a significant role in mood regulation, digestion, and sleep, among other bodily functions.

Dopamine

Dopamine is a neurotransmitter involved in many functions, including motivation, pleasure, cognition, memory, learning, and fine motor control.

Neurogenesis

The process of generating new neurons in the brain, which continues in certain brain regions throughout adulthood in humans.

Brain-derived Neurotropic Factor

A protein in the brain and peripheral nervous system that supports the survival of existing neurons and encourages the growth and differentiation of new neurons and synapses.