Rocky River Company Is a Price-Taker and Uses Target Pricing

question 108

Multiple Choice

Rocky River Company is a price-taker and uses target pricing.Refer to the following information: $$\begin{array} { | l | r | l | } \hline \text { Production volume } & 602,000 & \text { units per year } \\\hline \text { Market price } & \$ 34 & \text { per unit } \\\hline \text { Desired operating income } & 17 \% & \text { of total assets } \\\hline \text { Total assets } & \$ 13,900,000 & \\\hline\end{array}$$ What is the target full product cost per unit? (Round your answer to nearest cent.) Assume all units produced are sold.

• A)$34.00
• B)$30.07
• C)$5.78
• D)$28.22

---

Definitions:

Material Requirements Planning

A computer-based inventory management system used to manage manufacturing processes by determining material requirements and scheduling production.

Bill Of Material

A comprehensive list of raw materials, components, and assemblies required to manufacture or assemble a product.

Gross Requirements

The total amount of materials or products needed before any adjustments for inventory or scheduled production.

Net Requirements

The total amount of a material or product required, taking into account current inventory and any orders in process, to meet customer demand.