Arnold Company Produces Handheld Calculators, and Their Manufacturing Cost Is

question 106

Multiple Choice

Arnold Company produces handheld calculators, and their manufacturing cost is currently $5.80 per unit. The company also has non-manufacturing costs of $1.20 per unit. Arnold employs target pricing strategy, and the current market price is $8.00 per unit. If Arnold wishes to price their product at a 25% markup over full-product cost, what must they do?

• A) Price the product at $8.75 per unit.
• B) Reduce full-product cost by $0.20.
• C) Reduce full-product cost by $0.60.
• D) Reduce the non-manufacturing cost by 25%.

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Definitions:

Distinctive Competencies

Unique abilities or characteristics of an organization that provide a competitive advantage and can't be easily replicated by competitors.

Internal Fit

The alignment between an organization's strategy, processes, and structures to ensure optimal performance and efficiency.

Differentiation Strategy

A business approach where a company offers unique products or services to stand out from its competitors.

Strategic Planning

The process of defining a strategy or direction, and making decisions on allocating resources to pursue this strategy.