Which of the following formulas is the best representation of the concept of target costing?
A)target cost + profit margin = selling price
B)selling price - target cost = profit margin
C)selling price - profit margin = target cost
D)target cost - standard cost = profit margin

Question

Quizplus · Accepted Answer

Target costing is a pricing method used by companies to manage costs with the goal of ensuring profitability. It is calculated by subtracting the desired profit margin from the selling price to determine the maximum cost that can be incurred on a product while still earning the desired profit. Therefore, the formula "selling price - profit margin = target cost" best represents the concept of target costing.

Which of the Following Formulas Is the Best Representation of the Concept