Launch Company Sells 2500 Paddleboards Per Year at a Sales

question 173

Multiple Choice

Launch Company sells 2500 paddleboards per year at a sales price of $470 per unit.Launch sells in a highly competitive market and uses target pricing.The company has $800,000 of assets,and the shareholders wish to make a profit of 16% on assets.Variable cost is $190 per unit and cannot be reduced.Assume all products produced are sold.What are the target fixed costs?

• A) $1,175,000
• B) $1,047,000
• C) $128,000
• D) $572,000

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Definitions:

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity of that good that suppliers are willing to sell, typically upward sloping due to the law of supply.

Law of Supply

The law of supply states that, all else being equal, an increase in the price of a good or service will lead to an increase in the quantity supplied, and vice versa, reflecting producers' responsiveness to price changes.

Car Production Technology

The set of engineering practices, methodologies, and innovations used in the design and manufacturing of automobiles.

Leather

Leather is a durable and flexible material created by tanning animal rawhide and skins, primarily used in the production of goods like clothing, footwear, and furniture.