Gotham Products Is a Price-Taker and Uses Target Pricing

Multiple Choice

Gotham Products is a price-taker and uses target pricing. Gotham has just done an analysis of their revenues, costs and desired profits, and has calculated its target full product cost. Refer to the following information: Actual costs are currently higher than target full product cost. Assuming that fixed costs cannot be reduced, how much is the target variable cost per unit?

A) $1.20
B) $1.47
C) $1.33
D) $3.33