When the firm uses the target-costing approach to pricing, the target cost per unit is the difference between the per unit target price and the per unit target
A)contribution margin.
B)operating income.
C)production costs.
D)gross margin.
E)fixed costs.

Question

Quizplus · Accepted Answer

In target costing, the target cost per unit is calculated by subtracting the desired per unit operating income from the per unit target price. This ensures that the product can be produced at a cost that allows the firm to achieve its profit objectives.

When the Firm Uses the Target-Costing Approach to Pricing, the Target