Origami Company Is a Price-Taker and Uses Target Pricing -
How Much Is the Desired Profit for the Year

question 74

Multiple Choice

Origami Company is a price-taker and uses target pricing. Please refer to the following information:
$$\begin{array} { | l | r | r | } \hline \text { Production volume } & 500,000 & \text { Units per year } \\\hline \text { Narket price } & \$ 24.00 & \text { Per unit } \\\hline \text { Pesired aperating profit } & 12 \% & \text { Of total assets } \\\hline \text { Tatal assts } & \$ 12,500,000 & \\\hline\end{array}$$
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How much is the desired profit for the year?

• A) $1,440,000
• B) $11,000,000
• C) $12,000,000
• D) $1,500,000

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Definitions:

LIFO Reserve

A LIFO reserve is an accounting metric that companies use to account for the difference in cost of goods sold (COGS) calculated using the Last-In, First-Out (LIFO) method and another inventory accounting method, often the First-In, First-Out (FIFO) method.

FIFO

A stock control method where the oldest inventory items are sold first, ensuring that the cost of inventory matches the actual flow of goods.

Inventory Records

Documentation detailing the quantities, condition, and locations of all the inventory items a company holds.

Financial Analyst

A professional responsible for analyzing financial data, market trends, and investment opportunities to provide business insights and recommendations.