In the target costing approach to pricing, the total cost of a product is first determined and then an expected level of mark-up is added to get the desired selling price.

Question

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In the target costing approach to pricing, the selling price is determined first based on market demand and competition, and then the maximum allowable cost is calculated by subtracting the desired profit margin from the selling price. Therefore, the total cost of a product is not necessarily determined first in this approach.

In the Target Costing Approach to Pricing, the Total Cost