Question

Target costing is arrived at by taking a.the selling price and adding desired profit b.the selling price minus desired profit c.the budget standard cost and reducing it by 10% d.the selling price and subtracting the budget standard cost

Answer 1

The answer is B. the selling price minus desired profit

Step-by-step explanation:

The formula for target costing is:

Selling price minus desired profit(profit margin).

Target costing is one of the tools used by management to determine the cost at which a product will be sold for at every stage of its life-cycle.

One of the advantages of target costing is that it enables firms to think about the best way to produce a product at the lowest possible costs