The target cost approach assumes that
A) markup is added to total cost
B) the selling price is set by the marketplace
C) markup is added to variable cost
D) markup is added to product cost

Question

Quizplus · Accepted Answer

The target cost approach starts with the marketplace determining the selling price, and then the company selects a target cost that will allow them to achieve a desired profit margin. This means that the selling price is not set by the company's costs (as in choices A, C, and D) but rather by what the market will bear.

The Target Cost Approach Assumes That