Back Bay Company is a price-taker and uses target pricing.Refer to the following information: $$\begin{array} { | l | r | l | }
\hline \text { Production volume } & 602,000 & \text { units per year } \
\hline \text { Market price } & \$ 32 & \text { per unit } \
\hline \text { Desired operating income } & 15 \% & \text { of total assets } \
\hline \text { Total assets } & \$ 13,700,000 & \
\hline
\end{array}$$ What is the target full product cost per unit? (Round your answer to nearest cent. )Assume all units produced are sold.

Question

Back Bay Company is a price-taker and uses target pricing.Refer to the following information: $$\begin{array} { | l | r | l | } 
\hline \text { Production volume } & 602,000 & \text { units per year } \
\hline \text { Market price } & \$ 32 & \text { per unit } \
\hline \text { Desired operating income } & 15 \% & \text { of total assets } \
\hline \text { Total assets } & \$ 13,700,000 & \
\hline
\end{array}$$ What is the target full product cost per unit? (Round your answer to nearest cent. )Assume all units produced are sold.

Quizplus · Accepted Answer

Target full product cost per unit = Market price - (Desired operating income / Production volume)= $32 - (0.15 * $13,700,000 / 602,000)= $32 - $4.80= $28.59

Back Bay Company Is a Price-Taker and Uses Target Pricing