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owler Company is a priceminustaker and uses target pricing. Refer to the following information: ...

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Accounting

owler Company is a priceminustaker and uses target pricing. Refer to the following information:
Production volume
601,000
units per year
Market price
$30
per unit
Desired operating income
16%
of total assets
Total assets
$13,800,000
Variable cost per unit
$18
per unit
Fixed cost per year
$5,400,000
per year
With the current cost structure, Fowler cannot achieve its profit goals. It will have to reduce either the fixed costs or the variable costs. Assuming that variable costs cannot be reduced, what are the target fixed costs per year? Assume all units produced are sold.

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