Meson Production Is a Price-Taker If Fixed Costs Cannot Be Reduced,how Much Reduction in Variable

question 18

Multiple Choice

Meson Production is a price-taker.It produces large spools of electrical wire in a highly competitive market,so it practises target pricing.The current market price of the electric wire is $800 per unit.The company has $3,100,000 in assets and its shareholders expect a return of 9% on assets.The company provides the following information:
$$\begin{array} { | l | l | l | } \hline \text { Sales volume } & 120,000 & \text { units per year } \\\hline \text { Variable costs } & \$ 730 & \text { per unit } \\\hline \text { Fixed costs } & \$ 14,000,000 & \text { per year } \\\hline\end{array}$$
If fixed costs cannot be reduced,how much reduction in variable costs will be needed to achieve the profit target?

• A) $279,000
• B) $5,879,000
• C) $14,000,000
• D) $87,600,000

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Definitions:

Social Adjustment

The process by which individuals adapt their behavior to conform to the demands of a social environment or group.

Psychotic

Relating to or characterized by psychosis, marked by a disconnection from reality, often including delusions and hallucinations.

Active-phase Symptoms

Signs and symptoms that are prominently observable during the acute phase of a psychiatric disorder, such as schizophrenia, including hallucinations, delusions, and disorganized thinking.

Life-expectancy

The average period that an individual is expected to live, based on statistical averages of age, sex, and other factors.