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

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Definitions:

Partnership

A legitimate business arrangement where two or more partners share both management responsibilities and profits.

Stockholders

Individuals or entities that own shares of stock in a corporation, granting them certain rights and privileges.

Internal Controls

Procedures and policies implemented by a company to safeguard its assets, enhance the reliability of its accounting records, ensure compliance with laws, and achieve effective and efficient operations.

Fraud Triangle

A model explaining the factors that cause someone to commit occupational fraud, consisting of opportunity, pressure, and rationalization.