Which equation better describes target costing?
A)Selling Price - Desired Profit = Target Costs
B)Selling Price + Desired Profit = Target Costs
C)Total Costs - Desired Profit = Target Costs
D)Target Variable Cost + Desired Costs = Target costs

Question

Quizplus · Accepted Answer

Target costing is a process of determining the maximum cost that can be incurred on a product so that it can be sold at a required profit margin. Hence, the equation that better describes target costing is Selling Price - Desired Profit = Target Costs.

Which Equation Better Describes Target Costing