When Using a Target Costing Approach, the Company Starts with Revenue

question 112

True/False

When using a target costing approach, the company starts with revenue at market price, and then subtracts its desired profit, to yield the target total cost.

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Definitions:

Purchase Order

A legal obligation to buy from a supplier a certain amount of product, at a certain price, to be delivered at a specified date.

Legal Obligation

A requirement established by law, a contract, or another form of legally binding agreement, that mandates a party to act or to refrain from acting in a certain manner.

Supply Chain Management

The oversight of materials, information, and finances as they move from supplier to manufacturer to wholesaler to retailer to consumer.

Supply Chain Management

Supervising the progression of materials, finances, and information from the origin at the supplier, through the manufacturing process, onto wholesalers, retailers, and ending with the consumer.