Which of the following best describes "target costing"?
A)An approach to pricing that begins with revenue at market price and subtracts desired profit to arrive at target total cost
B)A factor that restricts production or sales of a product
C)All costs incurred along the value chain in connection with the product or service
D)An approach to pricing that begins with the product's total cost and adds desired profit

Question

Quizplus · Accepted Answer

Target costing is an approach to pricing where the selling price is determined by starting with the market price and deducting the desired profit margin to arrive at the target total cost. This helps in ensuring that the costs of production do not exceed the price that customers are willing to pay for the product.

Which of the Following Best Describes "Target Costing