215,434 views
37 votes
37 votes
WellminusBread

Grain Company is a priceminus
taker
and uses target pricing. The company has just done an analysis of its​ revenues, costs, and desired profits and has calculated its target full product cost. Assume all products produced are sold. Refer to the following​ information:
Target full product cost

​$510,000

per year
Actual fixed cost

​$280,000

per year
Actual variable cost

​$2

per unit
Production volume

​150,000

units per year
Actual costs are currently higher than target full product cost. Assuming that fixed costs cannot be​ reduced, what is the target variable cost per​ unit? (Round your answer to the nearest​ cent.)
A.
​$2.00
B.
​$3.40
C.
​$1.87
D.
​$1.53

User Harry Aung
by
3.1k points

1 Answer

19 votes
19 votes
The answer is B. 3.40
User Fhdrsdg
by
3.0k points