Which of the following statements is true of target pricing?
A)It starts with the price that customers are willing to pay.
B)The full product cost is added to the desired net profit to arrive at a sales price.
C)It does not consider the nonmanufacturing costs when calculating the target cost.
D)It is the same as cost-based pricing.

Question

Quizplus · Accepted Answer

Target pricing begins with determining the price that customers are willing to pay and then works backward to ensure that the product can be produced at a cost that allows for a desired profit margin.

Which of the Following Statements Is True of Target Pricing