Martin Manufacturers Produces 3 Models of Industrial Hammers What Must the Company Do to Achieve Their Profit Goal

question 57

Multiple Choice

Martin Manufacturers produces 3 models of industrial hammers. Martin uses the target pricing approach. The company's objective is to achieve gross profit equal to 40% of selling price. Other data are shown below:
$$\begin{array} { l l } \text { Current production cost } & \$ 42.50 \text { per unit } \\\text { Current market price } & \$ 60.00 \text { per unit }\end{array}$$
What must the company do to achieve their profit goal? (Please round all amounts to the nearest cent.)

• A) Reduce production cost by $6.50 per unit.
• B) Increase price by $0.50 per unit.
• C) Reduce production cost by $4.20 per unit.
• D) Increase price by $6.50.

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Definitions:

Pain

A distressing feeling and emotional response linked to real or possible damage to body tissues.

Neuroticism

A personality trait that predisposes individuals to experience negative emotions such as anxiety, anger, or depression more frequently and intensely than average.

Achievement Motivation

The desire to accomplish something significant, excel, and reach high standards of performance.

Fear of Failure

The pervasive apprehension about failing to meet standards or achieve goals, which can significantly inhibit one's willingness to take risks or try new tasks.