Paddle Paradise,Inc.sells 2500 canoes per year at a sales price of $450 per unit.It sells in a highly competitive market and uses target pricing.The company has calculated its target full product cost at $820,000 per year.Fixed costs are $340,000 per year and cannot be reduced.What is the target variable cost per unit assuming units sold are equal to units produced?

Question

Quizplus · Accepted Answer

Target variable cost per unit = (Target full product cost - Fixed costs) / Units sold= ($820,000 - $340,000) / 2500= $192