Answer the following questions using the information below:
Elliott Manufacturing has decided to produce a new interior door to complement its exterior door line.The new door is expected to sell for $60 each,and the annual target sales volume for the doors is 20 000.Elliott has target operating profit of 20% of sales.
-The product strategy in which companies first determine the price at which they can sell a new product and then design a product that can be produced at a low enough cost to provide adequate operating profit is referred to as:
A)full costing.
B)cost-plus pricing.
C)target costing.
D)Kaizen costing.

Question

Quizplus · Accepted Answer

The product strategy described in the question is target costing. This approach involves starting with a target selling price, and then designing and producing the product to meet that price while still achieving the desired level of profit. Cost-plus pricing (B) involves adding a markup to the product's cost to arrive at a selling price, and full costing (A) is a method of determining the total cost of a product by considering all of the direct and indirect costs involved. Kaizen costing (D) is a continuous improvement approach that focuses on reducing costs over time.

Answer the Following Questions Using the Information Below