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Meson Productions Is a Price-Taker

Question 19

Multiple Choice

Meson Productions is a price-taker.Meson produces large spools of electrical wire in a highly competitive market;thus,the company uses target pricing.The current market price of the electric wire is $760 per unit.The company has $3,200,000 in average assets,and the desired profit is a return of 5% on assets.Assume all products produced are sold.The company provides the following information:
Meson Productions is a price-taker.Meson produces large spools of electrical wire in a highly competitive market;thus,the company uses target pricing.The current market price of the electric wire is $760 per unit.The company has $3,200,000 in average assets,and the desired profit is a return of 5% on assets.Assume all products produced are sold.The company provides the following information: If variable costs cannot be reduced,how much reduction in fixed costs will be needed to achieve the profit target? A) $3,260,000 B) $13,000,000 C) $3,100,000 D) $13,160,000
If variable costs cannot be reduced,how much reduction in fixed costs will be needed to achieve the profit target?


A) $3,260,000
B) $13,000,000
C) $3,100,000
D) $13,160,000

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