Ortiz Company Is a Price-Taker and Uses Target Pricing

question 125

Multiple Choice

Ortiz Company is a price-taker and uses target pricing.Refer to the following information:

With the current cost structure,Ortiz 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 are the target variable costs per year? Assume all units produced are sold.

• A)$10,515,000
• B)$10,800,000
• C)$5,400,000
• D)$15,915,000

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Definitions:

Macular Degeneration

A progressive disease that usually affects people older than the age of 50. It occurs when the retina no longer receives an adequate blood supply.

Glaucoma

Glaucoma is a group of eye conditions that lead to optic nerve damage, often associated with increased pressure inside the eye and can result in vision loss.

Cataracts

A clouding of the lens in the eye which leads to a decrease in vision.

Presbyopia

An age-related condition in which the eye's lens loses its ability to focus, making it difficult to see objects up close.