When ConAgra foods decided to cut $250 million in costs to return to a $1 price point (after sales dropped as a result of raising prices $0.25 to cover higher commodity costs), it was using ________.
A) target costing
B) experience-curve pricing
C) ceiling pricing
D) the learning curve
E) promotional price elasticities

Question

Quizplus · Accepted Answer

ConAgra foods' decision to cut costs in order to return to a $1 price point is an example of target costing, which involves determining a target cost for a product or service and then working to achieve that cost through various cost-cutting measures. By using target costing, ConAgra foods was able to maintain a competitive price point while also addressing the issue of higher commodity costs.

When ConAgra Foods Decided to Cut $250 Million in Costs