Which of the Following Is the Correct Formula to Calculate

question 30

Multiple Choice

Which of the following is the correct formula to calculate the target cost?

• A)Target Cost = Target Sales Price + Desired Net Profit
• B)Target Cost = Target Sales Price - Desired Net Profit
• C)Target Cost = Target Sales Price
• D)Target Cost = Desired Net Profit + Research and Development Expenses

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Definitions:

Perfect Substitutes

Two goods for which the marginal rate of substitution of one for the other is a constant.

Labor Costs

The total sum of all wages, benefits, and taxes that businesses must pay for employing workers.

Rental Rate

The cost of renting a property, piece of equipment, or other asset, typically expressed per unit of time.

Short-Run Average Cost

The average cost of production per unit in the short term, where some inputs are fixed and others are variable.