Well-Bread Grain Company Is a Price-Taker and Uses Target Pricing

question 61

Multiple Choice

Well-Bread Grain 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: $$\begin{array} { | l | r | l | } \hline \text { Target full product cost } & \$ 500,000 & \text { per year } \\\hline \text { Actual fixed cost } & \$ 280,000 & \text { per year } \\\hline \text { Actual variable cost } & \$ 2 & \text { per unit } \\\hline \text { Production volume } & 150,000 & \text { units per year } \\\hline\end{array}$$ Actual costs are currently higher than target full product cost.Assuming that fixed costs cannot be reduced,what is the target variable cost per unit? (Round your answer to the nearest cent.)

• A)$3.33
• B)$1.47
• C)$1.87
• D)$2.00

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Definitions:

Transitivity

The principle that if A > B and B > C, then A > C.

Concrete-Operational Children

Describes children typically aged 7 to 11 years old who are in a developmental stage where they can logically think about concrete events but have difficulty understanding abstract or hypothetical concepts.

Decentration

The cognitive ability to consider multiple aspects of a situation simultaneously, important in child development as per Jean Piaget's theory.

Transitivity

A mathematical property indicating that if a relation holds between A and B, and also between B and C, then it must hold between A and C.