Rica Company Is a Price-Taker and Uses Target Pricing How Much Is the Target Full Product Cost Per Unit

question 45

Multiple Choice

Rica Company is a price-taker and uses target pricing. Refer to the following information: $$\begin{array} { | l | r | l | } \hline\text { Production volume } & 600,000 & \text { units per year } \\\hline \text { Market price } & \$ 30 & \text { per unit } \\\hline \text { Desired operating income } & 15 \% & \text { of total assets } \\\hline \text { Total assets } & \$ 13,900,000 & \\\hline\end{array}$$ How much is the target full product cost per unit? (Round your answer to nearest cent.) Assume all units produced are sold.

• A) $30
• B) $26.53
• C) $23.17
• D) $19.33

---

Definitions:

Annuity Due

A type of annuity payment where payments are made at the beginning of each period instead of the end.

Growing Perpetuity

A series of cash flows that grow at a consistent rate indefinitely.

Growing Annuity

A series of periodic payments that grow at a constant rate and are received for a finite number of periods.

Perpetuity

A type of annuity that pays a fixed amount of money to an investor at regular intervals indefinitely.