Abbott Company Is a Price-Taker and Uses Target Pricing

question 109

Multiple Choice

Abbott 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:

Actual costs are currently higher than target full product cost.Assuming that fixed costs cannot be reduced,what are the target total variable costs?

• A)$260,000
• B)$302,000
• C)$240,000
• D)$500,000

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Definitions:

Governmental Funds

Categories of funds used by governments in accounting to segregate transactions related to specific government functions, such as education or public safety.

Fiduciary Fund Types

Categories of funds used by governments to account for resources for which the government acts as a trustee or fiduciary for individuals, private organizations, or other government units.

Nonexchange Transactions

Transactions where one party receives value without directly giving or promising equal value in exchange, often seen in government grants or gifts.

Derived Tax Revenues

Taxes collected by government entities that are based on activities within their jurisdiction, such as sales taxes or income taxes.