Target Cost Is Calculated by Deducting Desired Gross Profit from Target

question 53

True/False

Target cost is calculated by deducting desired gross profit from target sales price.

---

Definitions:

Average Collection Period

The usual number of days necessary for a firm to get payments from its buyers.

Operating Cycle

The duration of time it takes for a company to buy inventory, sell the goods, and collect the receivables from the sale.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Cash Collections

Cash collections refer to the process of gathering all cash generated from sales, services, or receivables by a business during a specific period.