Back Bay Company is a price-taker and uses target pricing
Refer to the following information:
Production volume 602,000 units per year
Market price $32 per unit
Desired operating income 15% of total assets
Total assets $13,700,000
What is the target full product cost per unit? (Round your answer to nearest cent.) Assume all units produced are sold.
A) $32.00
B) $28.59
C) $4.80
D) $27.20
B .B)
Revenue at market price ($32 x 602,000 ) $19,264,000
Less: Desired profit ($13,700,000 x 15%) 2,055,000
Target full product cost $17,209,000
Target full product cost per unit ($17,209,000 / 602,000 ) $28.59
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