Box Industries (BI) produces computers. They believe the market will not longer support their current price. A new price of $900 per computer is suggested by the marketing department. BI requires
A 25% return on sales. BI can produce and expects to sell 11,000 units. Their current costs are as follows:
To achieve their target profit, BI must
A) Reduce their fixed higher level manufacturing costs to $2,500,000
B) Reduce variable costs of goods sold by $25 per unit
C) Reduce fixed selling & administrative costs to $1,250,000
D) All of the above will allow them to reach their target profit

Question

Box Industries (BI) produces computers. They believe the market will not longer support their current price. A new price of $900 per computer is suggested by the marketing department. BI requires
A 25% return on sales. BI can produce and expects to sell 11,000 units. Their current costs are as follows:
 To achieve their target profit, BI must
A) Reduce their fixed higher level manufacturing costs to $2,500,000 
B) Reduce variable costs of goods sold by $25 per unit 
C) Reduce fixed selling & administrative costs to $1,250,000 
D) All of the above will allow them to reach their target profit

Quizplus · Accepted Answer

The Answer of Box Industries (BI) produces computers. They believe the market will not longer support their current price. A new price of $900 per computer is suggested by the marketing department. BI requires
A 25% return on sales. BI can produce and expects to sell 11,000 units. Their current costs are as follows:
 To achieve their target profit, BI must
A) Reduce their fixed higher level manufacturing costs to $2,500,000 
B) Reduce variable costs of goods sold by $25 per unit 
C) Reduce fixed selling & administrative costs to $1,250,000 
D) All of the above will allow them to reach their target profit

Box Industries (BI) Produces Computers