Rica Company Is a Price-Taker and Uses Target Pricing

question 15

Multiple Choice

Rica Company is a price-taker and uses target pricing.Please refer to the following information:
- With the current cost structure,Rica cannot achieve its profit goals.It will have to reduce either the fixed costs or the variable costs.Assuming that fixed costs cannot be reduced,what will be the target variable costs per year? Assume all units produced are sold.

• A)$10,315,000
• B)$5,115,000
• C)$5,600,000
• D)$5,200,000

---

Definitions:

Bullwhip Effect

A phenomenon in supply chain management where small variations in demand at the retail level cause increasingly larger variations in demand at the wholesale, distributor, and manufacturer levels.

CPFR

Collaborative Planning, Forecasting, and Replenishment, a business practice where supply chain partners share information and resources to better predict demand and optimize supply.

Technology

The application of scientific knowledge for practical purposes, especially in industry.

Replenishment Lead Time

The time interval between placing an order and receiving the stock, crucial for inventory management.