Haskins Products sells 2,000 kayaks per year at a sales price of $470 per unit. Haskins sells in a highly competitive market and uses target pricing. The company has calculated its target full product cost at $720,000 per year. Total variable costs are $300,000 per year and cannot be reduced. Assume all products produced are sold. What are the target fixed costs?

target fixed costs is $ 420000

Explanation:

Given data

sells 2,000

sales price of $470 per unit.

product cost at $720,000

variable costs are $300,000

to find out

target fixed costs

solution

we know here product cost and variable cost

so target fixed costs is product cost - variable costs

so we put all these value to find out target fixed cost

target fixed costs = product cost - variable costs

target fixed costs = 720000 - 300000

target fixed costs is $ 420000