which of the following do you need to know to calculate target return price?\n□ expected unit sales\n□…

which of the following do you need to know to calculate target return price?\n□ expected unit sales\n□ variable costs\n□ break - even point\n□ fixed costs

which of the following do you need to know to calculate target return price?\n□ expected unit sales\n□ variable costs\n□ break - even point\n□ fixed costs

Answer

Explanation:

Step1: Recall target - return price formula

The formula for target - return price often involves total costs (fixed + variable) and expected unit sales. The target - return price $P$ is calculated such that the total revenue $P\times Q$ (where $Q$ is expected unit sales) covers total costs (fixed costs $FC$ and variable costs per unit $VC$ times the number of units $Q$) and provides the desired profit. Mathematically, $P\times Q=FC + VC\times Q+\text{Desired Profit}$. We can re - arrange it to solve for $P$.

Step2: Analyze each option

  • Expected unit sales ($Q$) is needed as it is part of the revenue and cost relationships in the target - return price calculation.
  • Variable costs ($VC$) are needed because they contribute to the total cost component in the formula.
  • Fixed costs ($FC$) are also needed as they are part of the total cost that the target - return price must cover.
  • The break - even point is not directly required to calculate the target - return price. The break - even point is related to the point where total revenue equals total cost with zero profit, while the target - return price is for a desired non - zero profit level.

Answer:

Expected unit sales, Variable costs, Fixed costs