Ignite Products Is a Price-Taker If Fixed Costs Cannot Be Reduced,how Much Reduction in Variable

question 95

Multiple Choice

Ignite Products is a price-taker.The company produces large spools of electrical wire in a highly competitive market; thus,it uses target pricing.The current market price of the electric wire is $800 per unit.The company has $3,100,000 in average assets,and the desired profit is a return of 7% on assets.Assume all products produced are sold.The company provides the following information: $$\begin{array} { | l | r | l | } \hline \text { Sales volume } & 100,000 & \text { units per year } \\\hline \text { Variable costs } & \$ 720 & \text { per unit } \\\hline \text { Fixed costs } & \$ 13,000,000 & \text { per year } \\\hline\end{array}$$ If fixed costs cannot be reduced,how much reduction in variable costs will be needed to achieve the desired target?

• A)$217,000
• B)$13,000,000
• C)$5,217,000
• D)$72,000,000

---

Definitions:

Intensive Care Unit

A specialized department in hospitals designed for the care of patients with severe or life-threatening illnesses and injuries, which require constant monitoring and support.

Stressors

External or internal factors that cause stress, challenging an individual's ability to cope, and can affect mental and physical health.

Stress

A state of mental or emotional strain or tension resulting from adverse or demanding circumstances.

Burn Dressing

A protective covering applied to a burn to promote healing and prevent infection.