The Owner of a Store That Sells Custom Kitchen Cabinets

Multiple Choice

The owner of a store that sells custom kitchen cabinets wishes to use a target return-on-sales pricing approach to establish a price for a typical section of cabinets. Assume that variable costs total $200 per unit, fixed cost is $44,000, and the storeowner desires a target profit of 20 percent return on sales at an annual volume of 400 cabinets. What price should be charged for a typical cabinet section?

A) $263.50
B) $311.00
C) $387.50
D) $445.50
E) $775.00