Rica Company Is a Price-Taker and Uses Target Pricing

question 51

Multiple Choice

Rica Company is a price-taker and uses target pricing.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 variable costs cannot be reduced,what will be the target fixed costs per year? Assume all units produced are sold.

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

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Definitions:

Job-Order Production

A manufacturing process in which products are made individually according to specific customer orders rather than in continuous or mass production.

Synthetic Production System

A manufacturing method involving the creation of products using synthetic processes, often involving the combination of raw materials through chemical synthesis to produce goods.

Standardization

The process of implementing and developing technical standards to ensure uniformity and consistency across different products, services, or processes.

Commercial-Grade Equipment

High-quality, durable equipment designed to meet the demands of commercial or professional usage.