The product strategy in which companies first determine the price at which they can sell a new product and then design a product that can be produced at a low enough cost to provide adequate operating income is referred to as ________.
A) cost-plus pricing
B) target costing
C) kaizen costing
D) full costing

Question

Quizplus · Accepted Answer

The given strategy is referred to as target costing, which involves setting a target cost for a product and then designing the product to meet the target cost while still providing the desired level of functionality and quality. This strategy aims to increase profitability by keeping costs low while still meeting customer expectations for price and quality. Cost-plus pricing involves adding a markup to the cost of producing a product to determine the selling price, while kaizen costing and full costing are methods of cost accounting used to determine the total cost of producing a product.

The Product Strategy in Which Companies First Determine the Price