Pueblo Products Is a Price-Taker and Uses Target Pricing

question 153

Multiple Choice

Pueblo Products is a price-taker and uses target pricing. Pueblo has just done an analysis of their revenues, costs and desired profits, and has calculated its target full cost. Please refer to the following information: Actual costs are currently higher than target full cost. Assuming that fixed costs are predominantly related to depreciation expense and CANNOT be reduced, how much is the target variable cost?

• A)$200,000 per year
• B)$250,000 per year
• C)$240,000 per year
• D)$214,000 per year

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Definitions:

Target Audience

A specific group of consumers identified as the intended recipients of a marketing message, based on demographic, psychographic, or behavioral characteristics.

Frequency

The average number of times a person in the target audience is exposed to a message or an advertisement.

Complex Ideas

Thoughts or concepts that are composed of multiple elements, requiring significant thought or abstraction to understand.

Brand Extensions

The practice of extending an existing brand name to new product categories or markets to leverage existing brand equity.