When target costing and target pricing are used together
A)the target cost is established first, then the target price.
B)the target cost per unit is the estimated long-run price per unit that enables a product or service to achieve the target profit per unit.
C)the target price is set to undercut the competition.
D)target costs are higher than current costs because of inflation over time.
E)target price is the estimated price for a product or service that a potential customer will be willing to pay.

Question

Quizplus · Accepted Answer

Target pricing involves estimating the price that customers are willing to pay for a product or service, which is then used to determine the target cost by subtracting the desired profit margin.

When Target Costing and Target Pricing Are Used Together