Target cost is computed by determining the appropriate selling price and then subtracting desired profit from it.

Question

Quizplus · Accepted Answer

Target cost is indeed calculated by first determining the selling price that the market will bear and then subtracting the desired profit margin from that price to arrive at the target cost. This approach helps companies ensure their products are competitively priced while still achieving their profit objectives.

Target Cost Is Computed by Determining the Appropriate Selling Price