Outrigger Leisure Products sells 2,000 kayaks per year at a price of $450 per unit. Outrigger sells 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 17% on assets. Fixed costs are $500,000 per year and cannot be reduced. Assume all products produced are sold. What are the target variable costs?
Outrigger Leisure Products sells 2,000 kayaks per year at a price of $450 per unit. Outrigger sells 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 17% on assets. Fixed costs are $500,000 per year and cannot be reduced. Assume all products produced are sold. What are the target variable costs?
Chapter14: Capital Structure Management In Practice
Section14.A: Breakeven Analysis
Problem 6P
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![Outrigger Leisure Products sells 2,000 kayaks per year at a price of $450 per unit. Outrigger sells 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 17%
on assets. Fixed costs are $500,000 per year and cannot be reduced. Assume all products produced are sold. What are
the target variable costs?
A. $230,000
B. $730,000
C. $124,101
D. $1,000,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F46459e91-dc06-48fe-a27d-5d9cc281241f%2F93baf7f4-b726-4bfa-827c-774cf470a2cc%2F5vdhuah_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Outrigger Leisure Products sells 2,000 kayaks per year at a price of $450 per unit. Outrigger sells 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 17%
on assets. Fixed costs are $500,000 per year and cannot be reduced. Assume all products produced are sold. What are
the target variable costs?
A. $230,000
B. $730,000
C. $124,101
D. $1,000,000
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