Komatsu Mfg

question 220

Multiple Choice

Komatsu Mfg. Co. uses target return pricing and expects to sell 40,000 units of its product in the coming year. Its fixed costs will be $500,000 and its variable costs will be about $20 per unit. If Komatsu seeks to earn a 20 percent return on its investment of $500,000, what price should it charge?

• A) $35.00
• B) $32.50
• C) $21.00
• D) $22.50
• E) $20.00

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