Meson Productions Is a Price-Taker

question 19

Multiple Choice

Meson Productions is a price-taker.Meson produces large spools of electrical wire in a highly competitive market;thus,the company uses target pricing.The current market price of the electric wire is $760 per unit.The company has $3,200,000 in average assets,and the desired profit is a return of 5% on assets.Assume all products produced are sold.The company provides the following information:

If variable costs cannot be reduced,how much reduction in fixed costs will be needed to achieve the profit target?

• A)$3,260,000
• B)$13,000,000
• C)$3,100,000
• D)$13,160,000

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Definitions:

Conservation

The cognitive ability to understand that certain properties of objects, such as volume or mass, remain the same despite changes in the object's form.

Accommodation

In cognitive psychology, the process by which individuals adjust their mental structures to incorporate new information.

Existing Concept

Refers to an idea or principle that has already been introduced or established in a certain field of study.

Self-reliant

The ability to depend on oneself for needs and decision-making without relying excessively on external support.