WDY Currently Sells Its Primary Product for $85 Per Unit

question 102

Multiple Choice

WDY currently sells its primary product for $85 per unit, with a profit margin of 30%. Cost of goods sold totals 40% of the product's total cost. WDY's managers are considering implementing a kaizen costing system. As part of its kaizen costing project, WDY's accountants estimate the price of the product will decline by 20% next year. To maintain the same profit margin, the total cost per unit will have to be reduced by

• A) Less than 20%
• B) Exactly 20%
• C) More than 20%
• D) Cannot be determined

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Definitions:

Frontal Lobes

The portion of the cerebral cortex lying just behind the forehead; involved in speaking and muscle movements and in making plans and judgments.

Explicit Memory

A form of enduring memory that entails the deliberate recall of particular details and occurrences.

Semantic Memory

Explicit memory of facts and general knowledge; one of our two conscious memory systems (the other is episodic memory).

Episodic Memory

Explicit memory of personally experienced events; one of our two conscious memory systems (the other is semantic memory).