Carbon Composite Poles Manufactures Fishing Poles That Have a Price

question 118

Essay

Carbon Composite Poles manufactures fishing poles that have a price of $125.00.It has costs of $90.A competitor is introducing a new fishing pole that will sell for $110.00.Management believes it must lower the price to $110.00 to compete in the highly cost-conscious fishing pole market.Marketing department believes that the new price will allow Carbon to maintain the current sales level of 200,000 poles per year.
Required:
a.What is the target cost for the new price if target operating income is 25% of sales?
b.What is the change in operating income for the year if only the selling price is changed and costs remain the same?
c.What is the target cost per unit if the selling price is reduced to $110.00 and the company wants to maintain its same income level?

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Definitions:

Family Violence

A pattern of abusive behaviors by one or more family members against another, including physical, sexual, emotional abuse, and neglect.

Alcohol Abuse

A pattern of drinking that results in harm to one’s health, interpersonal relationships, or ability to work.

Working with Abusive Families

An approach in social work or psychology focused on intervention and support for families experiencing patterns of abuse.

Outrage

A powerful feeling of shock and anger usually caused by something seen as unjust, offensive, or wrong.