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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?

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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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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