When Target Costing and Target Pricing Are Used Together

question 72

Multiple Choice

When target costing and target pricing are used together

• A)the target cost is established first, then the target price.
• B)the target cost per unit is the estimated long-run price per unit that enables a product or service to achieve the target profit per unit.
• C)the target price is set to undercut the competition.
• D)target costs are higher than current costs because of inflation over time.
• E)target price is the estimated price for a product or service that a potential customer will be willing to pay.

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Definitions:

Arbitrator

An independent individual or body officially appointed to settle a dispute, often used in the context of labor relations and commercial contracts.

Binding Decision

A final and enforceable ruling or judgment made by an authority that must be followed.

Neutral Third Party

An impartial entity involved in a dispute or negotiation to facilitate a resolution or agreement without any bias towards the parties involved.

Bargaining Zone

The range within which an agreement is satisfactory to both parties involved in a negotiation process.