When Target Costing Is Used,the Target Cost Is Determined By

question 2

Multiple Choice

When target costing is used,the target cost is determined by:

• A)finding the difference between the market price and the amount of profit needed to satisfy stakeholders.
• B)adding the cost of direct materials,direct labor,and activity costs of a product.
• C)subtracting all nonvalue-added costs from total manufacturing costs of a product.
• D)adding the manufacturing and nonmanufacturing costs of the product.

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Definitions:

Indirect Method

A method used in cash flow statement preparation that starts with net income and adjusts for changes in balance sheet accounts to arrive at cash provided by operating activities.

Cash Dividends

Earnings distributed by a company to its investors, usually representing a portion of profits.

Financing Activities

Transactions involving changes in the equity and borrowing of a firm as reported in its cash flow statement.

Comparative Balance Sheet

A financial statement presenting a company's financial position at different points in time, allowing for analysis of trends and changes.