Julian Company Is a Price-Taker and Uses Target Pricing With the Current Cost Structure,Julian Cannot Achieve Its Profit Goals

question 8

Multiple Choice

Julian Company is a price-taker and uses target pricing.Refer to the following information: $$\begin{array} { | l | r | l | } \hline \text { Production volume } & 601,000 & \text { units per year } \\\hline \text { Market price } & \$ 32 & \text { per unit } \\\hline \text { Desired operating income } & 16 \% & \text { of total assets } \\\hline \text { Total assets } & \$ 13,700,000 & \\\hline \text { Variable cost per unit } & \$ 20 & \text { per unit } \\\hline \text { Fixed cost per year } & \$ 5,600,000 & \text { per year } \\\hline\end{array}$$ With the current cost structure,Julian 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 unit per year? Assume all units produced are sold.(Round your answer to the nearest cent.)

• A) $5.12
• B) $12.00
• C) $19.03
• D) $20.00

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Definitions:

Job Design Management

Involves structuring job roles, tasks, and responsibilities in a way that maximizes employee efficiency and satisfaction, considering factors such as autonomy and variety.

Systematic Management

An approach to management that focuses on processes and procedures, emphasizing efficiency, standardization, and the overall coordination of all parts of an organization to achieve its objectives.

Performance-Based Pay

A compensation model that ties employees' salary or bonuses to their performance or achievements in the workplace.

Individual-Level

Pertains to factors or characteristics that relate to a single person, as opposed to groups or organizational entities.