Which of the following identifies an estimated price customers are willing to pay and then computes the cost to be achieved to earn the desired profit.
A) Cost-plus pricing
B) Target costing
C) Kaizen costing
D) Peak-load costing

Question

Quizplus · Accepted Answer

Target costing identifies the estimated price that customers are willing to pay and then works backwards to calculate the cost required to earn the desired profit. It aims to achieve maximum profitability while ensuring the product is priced competitively in the market. Cost-plus pricing (A) involves adding a markup to the cost of production, while Kaizen costing (C) is a continuous improvement approach that focuses on reducing costs over time. Peak-load costing (D) is used to allocate resources for high-demand periods.

Which of the Following Identifies an Estimated Price Customers Are