What costing method determines the cost of a product or service on the basis of the price that customers are willing to pay?
A)relevant costing
B)differential costing
C)target costing
D)product costing

Question

Quizplus · Accepted Answer

Target costing is a costing method that determines the cost of a product or service on the basis of the price that customers are willing to pay. This approach involves the creation of a target cost based on market research and analysis of customer needs and preferences. The target cost then drives the design and development of the product or service, with the aim of achieving profitability while meeting customer expectations. Target costing is commonly used in industries such as automotive, consumer electronics, and healthcare, where competition is intense and customer demands are constantly evolving.

What Costing Method Determines the Cost of a Product or Service