RTP Corp.is developing a new computer processor to compete against Intel's successful product line.RTP has already determined the market price and the required profit margin on each processor sold in order to be successful.Which costing method will RTP most likely use to reduce costs and obtain the desired results?
A)Target Costing.
B)Product costing.
C)Relevant costing.
D)Cost management.
E)Life cycle costing.

Question

Quizplus · Accepted Answer

Target costing is a costing method used by companies to reduce costs and achieve the desired profit margin. It begins with analyzing the market demand and determining the price that consumers are willing to pay. Once the target selling price is established, the company then deducts the desired profit margin to determine the target cost. By using this method, RTP Corp can work backwards from the desired profit margin to determine the maximum allowable cost of each processor, allowing the company to focus on reducing costs in order to be successful against Intel's product line.

RTP CorpIs Developing a New Computer Processor to Compete Against Intel's