Meson Productions is a price taker. Meson produces large spools of electrical wire in a...
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Meson Productions is a price taker. Meson produces large spools of electrical wire in a highly competitive market; thus, the company uses target pricing. The current market price of the electric wire is $770 per unit. The company has $3,000,000 in average assets, and the desired profit is a return of 5% on assets. Assume all products produced are sold. The company provides the following information: Sales volume Variable costs Fixed costs 110,000 units per year $730 per unit $12,000,000 per year If variable costs cannot be reduced, how much reduction in fixed costs will be needed to achieve the profit target? O A. $7,750,000 OB. $7,600,000 O C. $12,150,000 O D. $12,000,000
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