With the current cost structure

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Reference no: EM131033061

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Cassa Company is a price-taker and uses target pricing. Refer to the following information:

Production volume	601,000	units per year
Market price	$32	per unit
Desired operating income	16%	of total assets
Total assets	$13,900,000
Variable cost per unit	$20	per unit
Fixed cost per year	$5,400,000	per year

With the current cost structure, Cassa cannot achieve its profit goals. It will have to reduce either the fixed costs or the variable costs. Assuming that fixed costs cannot be reduced, what are the target variable costs per year? Assume all units produced are sold.

$12,020,000

$11,608,000

$5,400,000

$17,008,000

Reference no: EM131033061

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