The formula to determine target cost is as follows:
A) Target cost = Price - Required profit margin
B) Target cost = Price - Direct costs
C) Target cost = Price - Required ROI
D) Target cost = Price - Indirect costs

Question

Quizplus · Accepted Answer

Target cost is calculated by subtracting the required profit margin from the selling price. This helps companies determine how much they can afford to spend on producing a product while still achieving their desired profit margin.

The Formula to Determine Target Cost Is as Follows