Question 3 Fowler Company is a price - taker and uses target pricing. Refer to the following information:Production volume601,000 units per yearMarket priceDesired operating income$30 per unit16% of total assetsTotal assets$13,900,000Variable cost per unit$18 per unitFixed cost per year$5,400,000 per yearWith the current cost structure, Fowler cannot achieve its profit goals. It will have to reduce either the fixed costs or the variable costs. Assuming that variable costs cannot be reduced, what are the target fixed costs per year? Assume all unitsproduced are sold.O A. $12,630,000O B. $10,818,000OC. $5,400,000O D. $4,988,000

Desired Profit = $ 1,39,00,000 × 16% = $ 22,24,000

Fowler Company is a price - taker and uses target pricing. Refer to the following information: Production volume 601,000 units per year Market price Desired operating income $30 per unit 16% of total assets Total assets $13,900,000 Variable cost per unit $18 per unit $5,400,000 per year Fixed cost per year With the current cost structure, Fowler cannot achieve its profit goals. It will have to reduce either the fixed costs or the variable costs. Assuming that variable costs cannot be reduced, what are the target fixed costs per year? Assume all units produced are sold. O A. $12,630,000 O B. $10,818,000 OC. $5,400,000 O D. $4,988,000

Fowler Company is a price - taker and uses target pricing. Refer to the following information: Production volume 601,000 units per year Market price Desired operating income $30 per unit 16% of total assets Total assets $13,900,000 Variable cost per unit $18 per unit $5,400,000 per year Fixed cost per year With the current cost structure, Fowler cannot achieve its profit goals. It will have to reduce either the fixed costs or the variable costs. Assuming that variable costs cannot be reduced, what are the target fixed costs per year? Assume all units produced are sold. O A. $12,630,000 O B. $10,818,000 OC. $5,400,000 O D. $4,988,000

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter21: Variable Costing For Management analysis

Section: Chapter Questions

Problem 4CMA: Bethany Company has just completed the first month of producing a new product but has not yet...

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