ConAgra Foods decided its prices had risen too high, so it determined to set a lower price for its products. To make the new price level profitable, ConAgra cut $250 million in costs. What application of cost estimation did this represent?
A) target costing
B) experience-curve pricing
C) ceiling pricing
D) the learning curve
E) promotional price elasticities

Question

Quizplus · Accepted Answer

ConAgra Foods used target costing, which involves determining the target price for a product and then working backwards to determine the maximum allowable cost for that product in order to meet the target price. In this case, the desired lower price level was the target, and the company then cut costs in order to meet that target.

ConAgra Foods Decided Its Prices Had Risen Too High, So