The following four tasks take place in the concept known as target costing.
i. Value engineering
ii. Establish a target price
iii. Establish a target cost
iv. Establish a target profit
Which of the following correctly depicts the sequence of these tasks?
A) iii, i, iv and ii
B) ii, iv, iii and i
C) ii, iii, i and iv
D) iii, ii, i and iv

Question

Quizplus · Accepted Answer

The correct sequence for target costing starts with establishing a target price (what the market will pay), then determining a target profit (desired profit), followed by establishing a target cost (target price minus target profit), and finally, value engineering is applied to achieve the target cost.

The Following Four Tasks Take Place in the Concept Known