Revolve Company Is a Price-Taker and Uses a Target-Pricing Approach

question 10

Multiple Choice

Revolve Company is a price-taker and uses a target-pricing approach.Refer to the following information: $$\begin{array} { | l | r|l| } \hline \text { Production volume } & 602,000 &\text { units per year } \\\hline \text { Market price } & \$ 30 &\text { per unit } \\\hline \text { Desired operating income } & 16 \%& \text { of total assets } \\\hline \text { Total assets } & \$ 13,700,000 \\\hline\end{array}$$ What is the target full product cost in total for the year? Assume all units produced are sold.

• A) $96,320
• B) $15,868,000
• C) $13,700,000
• D) $2,192,000

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage rate.

Demand for Loanable Funds

The desire to borrow money, driven by businesses and individuals who seek financing for investment, consumption, or other purposes, typically influenced by interest rates.

Unanticipated Inflation

Inflation that occurs when the actual rate of inflation exceeds the expected rate, often leading to distortions in economic decision-making and allocations.

Borrowers

are individuals, companies, or entities that take out loans from lenders with the obligation of repaying the borrowed amount plus interest or other charges.