Target Costing Is Arrived at by

question 99

Multiple Choice

Target costing is arrived at by

• A) taking the selling price and subtracting desired profit.
• B) taking the selling price and adding desired profit.
• C) taking the selling price and subtracting the budget standard cost.
• D) taking the budget standard cost and reducing it by 10%.

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Definitions:

Process Costing System

A method of allocating production costs to products and services based on the processes they go through, common in industries where products are indistinguishable.

Costs Flow

The movement and allocation of costs through different stages of production or services within a company.

Finished Goods

Products that have completed the manufacturing process but have not yet been sold to customers.

Conversion Cost

The combined cost of direct labor and manufacturing overheads incurred to convert raw materials into finished goods.