PLM's managers are attempting to build a new product, a better mousetrap. They began by determining the features customers wanted and what they would pay for those features. PLM's engineers then reverse-engineered a competitor's product to understand its design and related production processes. Their analysis indicated that customers would pay $10.00 for a better mousetrap. What process did PLM use according to the preceding scenario?
A) Value chain costing
B) Target costing
C) Kaizen costing
D) Life cycle costing

Question

Quizplus · Accepted Answer

PLM used target costing, which involves determining the price customers are willing to pay for a product and then subtracting a desired profit margin to arrive at a target cost. This process often includes understanding competitor products and costs to ensure the new product can be competitively priced and profitable.

PLM's Managers Are Attempting to Build a New Product, a Better