Sparks Stationery Company Is a Price-Taker and Uses Target Pricing

question 60

Multiple Choice

Sparks Stationery Company is a price-taker and uses target pricing.The company has just done an analysis of its revenues,costs,and desired profits and has calculated its target full product cost.Assume all products produced are sold.Refer to the following information: $$\begin{array} { | l | r | l | } \hline \text { Target full product cost } & \$ 520,000 & \text { per year } \\\hline \text { Actual fixed cost } & \$ 280,000 & \text { per year } \\\hline \text { Actual variable cost } & \$ 2 & \text { per unit } \\\hline \text { Production volume } & 152,000 & \text { units per year } \\\hline\end{array}$$ Actual costs are currently higher than target full product cost.Assuming that fixed costs cannot be reduced,what is the target variable cost per unit? (Round your answer to the nearest cent. )

• A)$3.42
• B)$1.58
• C)$1.84
• D)$2.00

---

Definitions:

Court of Law

A governmental institution authorized to resolve legal disputes between parties and administer justice in civil, criminal, and administrative matters.

Complete Contract

A contract that includes all the terms and conditions agreed upon by the parties, leaving no ambiguities.

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States.

Model Laws

Statutes recommended by organizations, such as the Uniform Law Commission, for adoption by all jurisdictions to encourage consistent legal standards across states or countries.