BBM Corporation'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. BBM'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 BBM use according to the preceding scenario?
A) Kaizen costing
B) Value chain costing
C) Target costing
D) Life cycle costing

Question

Quizplus · Accepted Answer

BBM used target costing by determining the features customers wanted and what they would pay for those features, and then reverse-engineering a competitor's product to understand its design and production processes. They set a target cost of $10.00 based on customer willingness to pay.

BBM Corporation's Managers Are Attempting to Build a New Product