Asked by Joann Quigee on Jul 07, 2024
Verified
Target costing involves adding a target profit per unit to actual unit cost to determine the selling price.
Target Costing
A pricing strategy in which the selling price and profit margin are used to determine the maximum cost that can be incurred on a product, with the aim of ensuring competitiveness and profitability.
Target Profit
The specific net income a business intends to reach within a designated timeframe.
- Acquire knowledge on the essentials of target costing and how it influences the setting of selling prices.
Verified Answer
DH
Dylan HernandezJul 08, 2024
Final Answer :
False
Explanation :
Target costing involves determining the target selling price based on the market demand and then subtracting a target profit margin to arrive at the maximum allowable cost per unit.
Learning Objectives
- Acquire knowledge on the essentials of target costing and how it influences the setting of selling prices.