Dugout Water Products sels 2,000 kayaks per year ata price of $460 ner unit. Dugout sell in a highly competitive market and uses target pricing. The company has $1.,000,000 of assets, and the shareholders wish to make a profit of 16% on assets Assume al preducts produced are sold. What is the target full product cost? O A. $16.000,000 OB. $1,067 200 O C. $760,000 O D. $920,000
Dugout Water Products sels 2,000 kayaks per year ata price of $460 ner unit. Dugout sell in a highly competitive market and uses target pricing. The company has $1.,000,000 of assets, and the shareholders wish to make a profit of 16% on assets Assume al preducts produced are sold. What is the target full product cost? O A. $16.000,000 OB. $1,067 200 O C. $760,000 O D. $920,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Dugout Water Products sells 2,000 kayaks per year at a price of $460 ner unit. Dugout sells in a highly competitive market and uses target pricing. The company has
$1,000,000 of assets, and the sharaholders wish to make a profit of 16% on assets Assume al products produced are sold. What is the target full product cost?
les revenue
O A. $16.000.000
ariable costs
O B. $1,067 200
Contribution margin
O C. $760,000
O D. $920,000
Fixed costs
Operating Income (loss)
If $50,000 of fixed costs will be eli
helmets affect operating income.c
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Transcribed Image Text:Armor Sports, Inc has two product lines batting helmets and football helmets. The income statement data for the most recent year is as follows:
nue
Total
Batting Helmets
Football Helmets
$350 D00
5850,000
(440 000
$410,000
(180 000)
$230.000
Sales revenue
$500,000
Eosts
(150,000)
S350,000
(290 000)
S60 000
(110 000
S 50 000)
Variable costs
Contribution margin
tion margin
(70 000)
$280.000
Fixed costs
Operating income (loss)
What is the effect of dropping football heimets line on the operating ircome of the company? (Assume that fixed costs remain unchanged and that there would be no
adverse effect on other sales.)
asts
ting income (losst
O A. Operattng income will increase by $50-000
OB. Operating income will decrease by S60 000
D00 of fixed cosis will be eli
ts affect operating income OC Operating income will decrease by $350.000
O D. Operating Income will increase by S70.000
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