Management accounting information helps managers calculate a target cost for a product ________.
A) by subtracting from the target price the operating income per unit of product that the company wants to earn
B) by subtracting from the target price the net income per unit of product that the company wants to earn
C) by subtracting profit margin per unit from the target price of product that the company wants to earn
D) by adding the operating income per unit and the contribution margin per unit

Question

Quizplus · Accepted Answer

Management accounting information helps managers calculate a target cost for a product by subtracting from the target price the operating income per unit of product that the company wants to earn. This helps the managers to determine the maximum cost that can be incurred to produce the product while still maintaining the desired profit margin.

Management Accounting Information Helps Managers Calculate a Target Cost for a Product