The method that enables a company to establish an initial price, set a profit margin, and control costs to ensure that the required profit margin is met is called
A) cost-plus pricing.
B) value-based pricing.
C) price skimming.
D) target costing.
E) price penetration.

Question

Quizplus · Accepted Answer

Target costing is a pricing method where a company first determines the price at which it wants to sell a product, then subtracts a desired profit margin to arrive at a target cost. The company then works to control costs to ensure they do not exceed this target, allowing it to meet its profit goals.

The Method That Enables a Company to Establish an Initial