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)operating profit.
B)contribution margin.
C)production costs.
D)gross margin.

Question

Quizplus · Accepted Answer

The target cost per unit in the target-costing approach is calculated by subtracting the per unit target operating profit from the per unit target price. This approach helps in determining the cost that a product must be manufactured at to achieve the desired profit margin at the anticipated selling price.

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