Cassa Company Is a Price-Taker and Uses Target Pricing

question 146

Multiple Choice

Cassa Company is a price-taker and uses target pricing.Refer to the following information:

With the current cost structure,Cassa 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 year? Assume all units produced are sold.

• A)$11,547,000
• B)$12,020,000
• C)$5,600,000
• D)$17,147,000

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Definitions:

Scooter Assembly

The process of putting together the various components of a scooter to make it ready for sale or use.

Assembly Worker

An individual employed to construct various components into a final product in a manufacturing process.

Raw Materials Inventory Turnover

A measure of how frequently a company uses and replenishes its stock of raw materials within a specific period.

Raw Materials Used

Refers to the basic substances in their natural, modified, or semi-processed state used in manufacturing or production.