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Base Line, Inc. makes tennis balls. The company can produce up to 500,000 cans of...

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Base Line, Inc. makes tennis balls. The company can produce up to 500,000 cans of balls per year. Current annual production is 450,000 cans. Annual fixed costs total $150,000. The variable cost of making and selling each can of balls is $0.75 Owners expect a 15% annual return on the company's $1,000,000 in assets. Assume that Base Line is a price taker in a highly competitive environment. The current market price for a can of balls produced by manufacturers similar to Base Line is $1.50. If Base Line is unable to reduce its total fixed costs below $150,000, what should its target unit variable cost be? (note: it is possible for the target unit variable cost to be below the current unit variable cost) A. $0.83 O B. $1.08 C. $1.35 D. $1.50 O E. $0.75 Base Line has hired a marketing agency to help it gain more control over its sales price. The agency's fee for developing the advertising campaign is $75,740. Assuming sales volume and other costs will not be affected by the advertising campaign, what would Base Line's cost plus price be? O A. $1.50 O B. $1.42 C. $1.43 D. $1.58 O E. $0.92

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