What Is the Most Appropriate Definition of Target Costing

question 7

Multiple Choice

What is the most appropriate definition of target costing?

• A) A budget cost for a product once the product design has been agreed
• B) A cost allowance set by the marketing department for the production team
• C) The difference between the selling price less the desired profit estimated before it is manufactured
• D) The competitors' cost, which the design team is attempting to match

---

Definitions:

Competitive Pressures

The forces and dynamics within a market that compel businesses to compete more aggressively for customers, market share, and profitability.

Private-label Merchandise

Products that are manufactured by one company but branded and sold under another company's brand.

Convenience Stores

Small retail businesses that aim to sell everyday items such as snacks, beverages, and household goods, emphasizing quick service and easy access.

Warehouse Clubs

Large retailers with an irregular assortment, low service levels, and low prices that often require membership for shoppers.