Place the Following Steps for the Implementation of Target Costing

question 61

Multiple Choice

Place the following steps for the implementation of target costing for a product in order:
A = Derive a target cost
B = Develop a target selling price
C = Perform value engineering
D = Determine target profit margin

• A)B D A C
• B)B A D C
• C)A D B C
• D)A B C D

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Definitions:

Carrying Inventory

The process of holding stock or goods in storage or in transit, with associated costs.

Terms of Sale

The conditions under which a seller will complete a sale, typically specifying the time and method of payment and when the buyer takes possession of the goods.

Credit Period

The duration of time a buyer is given by a seller to pay for a purchase.

Cash Discount

An incentive offered by sellers to encourage buyers to pay their invoice ahead of the due date.