Rica Company Is a Price-Taker and Uses Target Pricing

question 152

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 fixed costs cannot be reduced,what will be the target variable costs per unit per year? Assume all units produced are sold.(Round your answer to the nearest cent.)

• A)$26.53
• B)$9.33
• C)$17.19
• D)$18

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Definitions:

Business Failures

Occurrences when companies cease operations due to financial problems, lack of demand, mismanagement, or other factors, sometimes resulting in bankruptcy.

New Ideas

Innovations or concepts that have not been previously introduced or considered, often leading to technological advancements or new business models.

Competitive Price-Searcher Markets

Markets where firms have some power to set prices due to differentiated products but still face competition and must search for competitive pricing strategies.

Purely Competitive Markets

Markets characterized by many buyers and sellers, homogeneous products, and no single participant having market control.