Place the five steps in implementing a target costing approach in the proper order:
1 - Determine desired profit
2 - Use kaizen costing and operational control to reduce costs
3 - Determine the market price
4 - Use value engineering to identify ways to reduce product costs
5 - Calculate the target cost at market price less desired profit
A) 3,2,1,4,5.
B) 2,5,4,1,3.
C) 4,5,1,3,2.
D) 3,1,5,4,2.
E) 5,3,2,1,4.

Question

Quizplus · Accepted Answer

The correct sequence for implementing a target costing approach starts with determining the market price (3), then determining the desired profit (1), calculating the target cost by subtracting the desired profit from the market price (5), using value engineering to identify ways to reduce product costs (4), and finally using kaizen costing and operational control to reduce costs further (2).

Place the Five Steps in Implementing a Target Costing Approach