Question

Revolve Company is a price-taker and uses a target-pricing approach« on: September 24, 2015, 03:43:22 PM »Refer to the following information:Production volume 602,000 units per yearMarket price $32 per unitDesired operating income 15% of total assetsTotal assets $13,700,000 What is the target full product cost in total for the year? Assume all units produced are sold.

Answer 1

Answer: $17,209,000

Step-by-step explanation:

Given that,

Production volume = 602,000 units per year

Market price = $32 per unit

Desired operating income = 15% of total assets

Total assets = $13,700,000

Total Income = 15% of Total assets

= $13,700,000 × 15%

= $ 2,055,000

Total Sales = Market price × Production volume

= $32 × 602,000

= $ 19,264,000

Target full product cost in total for the year = Total Sales - Total Income

= $ 9,264,000 - $2,055,000

= $17,209,000