Kate & Hark's, a custom kitchen cabinet store, has received a bulk order for the supply of 400 cabinets.The variable cost incurred is $200 per unit and the fixed cost is $44,000. If a target profit of $10,000 on a volume of 400 cabinets is desired, what price should be charged for a typical cabinet section?
A)$335
B)$310
C)$455
D)$398

Question

Quizplus · Accepted Answer

When a firm sets an annual target of a specific dollar amount of profit, this is called target profit pricing.Profit = total revenue - total cost; that is, profit = (P F1F1F1S1F1F1F10 Q) - [FC + (UVC F1F1F1S1F1F1F10 Q)].Thus, $10,000 = (P F1F1F1S1F1F1F10 400) - [44,000 + ($200 F1F1F1S1F1F1F10 400)].Hence, P = $335.

Kate & Hark's, a Custom Kitchen Cabinet Store, Has Received