Target costing reverses the usual process of first designing a new product,determining its cost and then asking,'Can we sell it for that?'.

Question

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Target costing involves setting a selling price based on market demand, and working backwards to determine the maximum allowable cost of producing the product while still making a desired profit margin. Therefore, the process is reversed from the traditional approach of determining cost first and then setting a selling price.

Target Costing Reverses the Usual Process of First Designing a New