Question

Companies using target costing ________. start with an ideal selling price and then target costs that will ensure that the price is met avoid determining an ideal selling price until analyzing test market results tailor their products to be in line with the marketing mix routinely neglect customer value considerations first design a new product and then determine its cost

Answer 1

Companies using target costing start with an ideal selling price and then target costs that will ensure that the price is met.

Companies use this approach to make sure they are setting a projects price point at appropriately. They want to make sure it meets the standards the price point is set at by quality and functionality of the product being worth the money a customer will spend for it. They are able to design their profit margin and build the target costs and revenue around that.