Wheeler Company is a price-taker and uses a target-pricing approach.Refer to the following information: $$\begin{array} { | l | l | l | }
\hline \text { Production volume } & 500,000 & \text { units per year } \
\hline \text { Market price } & \$ 34 & \text { per unit } \
\hline \text { Desired operating income } & 17 \% & \text { of total assets } \
\hline \text { Total assets } & \$ 13,800,000 & \
\hline
\end{array}$$ What is the desired profit for the year?

Question

Wheeler Company is a price-taker and uses a target-pricing approach.Refer to the following information: $$\begin{array} { | l | l | l | } 
\hline \text { Production volume } & 500,000 & \text { units per year } \
\hline \text { Market price } & \$ 34 & \text { per unit } \
\hline \text { Desired operating income } & 17 \% & \text { of total assets } \
\hline \text { Total assets } & \$ 13,800,000 & \
\hline
\end{array}$$ What is the desired profit for the year?

Quizplus · Accepted Answer

The desired profit is calculated as 17% of total assets: 0.17 * $13,800,000 = $2,346,000.

Wheeler Company Is a Price-Taker and Uses a Target-Pricing Approach