Target costing:
A)Determines cost based on an expected market demand for the product.
B)Determines cost based on a budget.
C)Determines cost based on standard cost.
D)Determines cost based upon market price and desired profit.

Question

Quizplus · Accepted Answer

Target costing is a cost management approach that determines the maximum amount of cost that can be incurred for a product, based on the market price and desired profit. It involves analyzing customer needs and preferences, determining a target price based on market research, and then working backward to determine the target cost that will enable the company to achieve its profit margin. Therefore, the correct choice is D.

Target Costing