Abbott Company Is a Price-Taker and Uses Target Pricing Actual Costs Are Currently Higher Than Target Full Product Cost

question 58

Multiple Choice

Abbott Company is a price-taker and uses target pricing.The company has just done an analysis of its revenues,costs,and desired profits and has calculated its target full product cost.Assume all products produced are sold.Refer to the following information: $$\begin{array} { | l | r | l | } \hline \text { Target full product cost } & \$ 500,000 & \text { per year } \\\hline \text { Actual fixed cost } & \$ 260,000 & \text { per year } \\\hline \text { Actual variable cost } & \$ 2 & \text { per unit } \\\hline \text { Production volume } & 151,000 & \text { units per year } \\\hline\end{array}$$ Actual costs are currently higher than target full product cost.Assuming that fixed costs cannot be reduced,what are the target total variable costs?

• A)$260,000
• B)$302,000
• C)$240,000
• D)$500,000

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Definitions:

Anxiety-Provoking Situations

Circumstances or events that induce a state of anxiety or stress, often used in psychological studies to understand coping mechanisms.

Systematic Desensitization

A behavioral therapy technique aimed at reducing phobic reactions through gradual exposure to the feared object or situation while practicing relaxation techniques.

Phobias

Intense, irrational fears of specific objects or situations.

Aversion Therapy

A form of psychological treatment in which an undesirable behavior is paired with an unpleasant stimulus to reduce the frequency of the behavior.