The formula for target cost is:
A)Target cost = Anticipated selling price - Desired profit.
B)Target cost = Unit cost + (Markup percentage × Unit cost)
C)Target cost = Units sold × Unit cost traceable to product
D)Target cost = (Desired return on assets employed + Selling and administrative expenses) ÷ (Units sold × Unit product cost)

Question

Quizplus · Accepted Answer

Target cost is the maximum amount that a firm can pay for materials, labor, overhead, and other costs while still achieving its desired profit margin. The formula for target cost is the anticipated selling price minus the desired profit. This formula helps firms to determine the costs that they must control to achieve their profit objectives.

The Formula for Target Cost Is