Target costing is most likely to be successful when the:
A) Manufacturer is solely responsible for managing costs
B) Product is a commodity
C) Production process is complex
D) Managers and accountants make all of the decisions

Question

Quizplus · Accepted Answer

Target costing is most effective when the production process is complex because it requires close collaboration between designers, engineers, and accountants to determine the most cost-effective way to produce the product without sacrificing quality. In this scenario, all parties involved in the production process should work together to ensure that the product is designed and produced according to target cost. Choice A is incorrect because it implies that only the manufacturer is responsible for managing costs, which is not the case in target costing. B is incorrect as target costing is not suitable for commodity products. D is incorrect because target costing requires input from various departments, not solely from managers and accountants.

Target Costing Is Most Likely to Be Successful When The