Well-Bread Grain Company Is a Price-Taker and Uses Target Pricing

question 9

Multiple Choice

Well-Bread Grain 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: $$\begin{array} { | l | l | l | } \hline \text { Target full product cost } & \$ 520,000 & \text { per year } \\\hline \text { Actual fixed cost } & \$ 281,000 & \text { per year } \\\hline \text { Actual variable cost } & \$ 2 & \text { per unit } \\\hline \text { Production volume } & 150,000 & \text { units per year } \\\hline\end{array}$$ Actual costs are currently higher than target full product cost.Assuming that fixed costs cannot be reduced,what is the target variable cost per unit? (Round your answer to the nearest cent.)

• A) $3.47
• B) $1.59
• C) $1.87
• D) $2.00

---

Definitions:

Cross-Culturally Sensitive

Showing an awareness of, respect for, and consideration towards the differences and similarities across cultures.

Social Awareness

The ability to understand and respond to the needs of others and the dynamics of social situations.

Internal Locus Control

A psychological concept referring to individuals who believe they have control over the outcomes of their actions, as opposed to external forces being in control.

Job Involvement

The degree to which an individual is engaged and finds significance in their job.