Peacock, inc. sells 2,100 kayaks per year at a sales price of $500 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?

The target variable cost per unit assuming units sold are equal to units produced is $228.571

Explanation:

The formula to compute the target variable cost per unit is shown below:

= Target variable cost ÷ number of kayaks sold

where,

Target variable cost = Target full product cost - Fixed costs

                                 = $820,000 - $340,000

                                 = $480,000

And, the  number of kayaks sold is 2,100

Now put these values to the above formula  

So, the per unit would equal to

= $480,000 ÷ 2,100

= $228.571

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

disadvantages of leasing a vehicle: no vehicle equity and mileage limitations

disadvantages of purchasing a vehicle: large down payment and vehicle depreciation

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