What is the most appropriate definition of target costing?
A) A budget cost for a product once the product design has been agreed
B) A cost allowance set by the marketing department for the production team
C) The difference between the selling price less the desired profit estimated before it is manufactured
D) The competitors' cost, which the design team is attempting to match

Question

Quizplus · Accepted Answer

Target costing is a pricing strategy where the selling price is set first, and then the desired profit is subtracted to determine the maximum allowable cost for the product.

What Is the Most Appropriate Definition of Target Costing