Murray Products sells 2,100 kayaks per year at a price of $450 per unit
Murray sells in a highly competitive market and uses target pricing. The company has $990,000 of assets and the shareholders wish to make a profit of 17% on assets. Fixed costs are $450,000 per year and cannot be reduced. Assume all products produced are sold. What are the target variable costs?
A) $132,040
B) $990,000
C) $776,700
D) $326,700
D .D)
Revenue at market price (2,100 x $450 ) $945,000
Less: Desired profit ($990,000 x 17%) 168,300
Target full product cost $776,700
Less: Fixed costs 450,000
Target variable costs $326,700
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A. the desire to increase profits and sales. B. the desire to invest excess capital from domestic markets. C. the desire to protect profits and sales from being eroded by competitors. D. the desire to increase sales and reduce costs. E. the desire to increase profits and sales and to protect profits and sales from being eroded by competitors.
Individuals have an advantage over FIs in that individuals more easily can diversify away some of the credit risk of their asset portfolios.
a. true b. false