Target costing is arrived at by taking
A) the selling price minus desired profit
B) the selling price and adding desired profit
C) the selling price and subtracting the budget standard cost
D) the budget standard cost and reducing it by 10%

Question

Quizplus · Accepted Answer

Target costing is the costing method where a desired profit margin is subtracted from the expected selling price to arrive at the target cost. This cost then becomes the basis for setting the budget for the production process. Hence, option A is the correct one.

Target Costing Is Arrived at by Taking