Lyman currently sells an industrial mixer for $900 that market leaders sell for $820. The current costs to manufacture and distribute the mixer total $645, and the company has a profit goal of 30% of sales. Lyman uses target costing in its efforts to be a leader in the marketplace. On the basis of this information, (1) what should Lyman consider to be the initial driver of the target-costing process and (2) what amount of cost reduction is needed for the company to achieve its goals?
A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E

Question

Lyman currently sells an industrial mixer for $900 that market leaders sell for $820. The current costs to manufacture and distribute the mixer total $645, and the company has a profit goal of 30% of sales. Lyman uses target costing in its efforts to be a leader in the marketplace. On the basis of this information, (1) what should Lyman consider to be the initial driver of the target-costing process and (2) what amount of cost reduction is needed for the company to achieve its goals? 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Quizplus · Accepted Answer

The Answer of Lyman currently sells an industrial mixer for $900 that market leaders sell for $820. The current costs to manufacture and distribute the mixer total $645, and the company has a profit goal of 30% of sales. Lyman uses target costing in its efforts to be a leader in the marketplace. On the basis of this information, (1) what should Lyman consider to be the initial driver of the target-costing process and (2) what amount of cost reduction is needed for the company to achieve its goals? 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Lyman Currently Sells an Industrial Mixer for $900 That Market