Answer the following questions using the information below:
Elliott Manufacturing has decided to produce a new interior door to complement its exterior door line.The new door is expected to sell for $60 each,and the annual target sales volume for the doors is 20 000.Elliott has target operating profit of 20% of sales.
-When target costing and target pricing are used together:
A)the focus of target pricing is to undercut the competition.
B)the target cost is established first,then the target price.
C)target costs are generally higher than current costs.
D)the target cost is the estimated long-run cost that enables a product or service to achieve a desired profit.

Question

Quizplus · Accepted Answer

The target cost is indeed the estimated long-run cost that allows a product or service to achieve a desired profit margin when target costing and target pricing are used together. This approach ensures that the product is priced competitively while still meeting profit goals.

Answer the Following Questions Using the Information Below