Question

Target costing begins with determining the cost of the product and then focusing on developing ways to sell the product at a price that will enable the company to achieve its desired profit margin.
a. True
b. False

Answer 1

Answer:

Target costing does not begin with the determination of the cost of the product  and then focusing on developing ways to sell the product at a price that will enable the company to achieve its desired profit margin.

The correct answer is B

Explanation:

In target costing, the company does not determine the price because the price is determined by the market. Target costing begins with determining the target profit. Then, the company deducts the target profit from the market price in order to obtain the target cost.