Answer the Following Questions Using the Information Below

question 30

Multiple Choice

Answer the following questions using the information below:
Elliott Manufacturing has decided to produce a new interior door to complement its exterior door line.The new door is expected to sell for $60 each,and the annual target sales volume for the doors is 20 000.Elliott has target operating profit of 20% of sales.
-When target costing and target pricing are used together:

• A)the focus of target pricing is to undercut the competition.
• B)the target cost is established first,then the target price.
• C)target costs are generally higher than current costs.
• D)the target cost is the estimated long-run cost that enables a product or service to achieve a desired profit.

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Definitions:

Funded Status

A measure of a pension plan's assets relative to its liabilities, indicating whether it has enough assets to cover its pension obligations.

Pension Discount Rate

The interest rate used to determine the present value of future pension liabilities.

Current Cash Flows

The money that is moving in and out of a business in the present time, especially as it pertains to operating activities.

Past Service Costs

Costs related to pension plan benefits earned by employees in prior periods, which are recognized in the current period due to plan amendments or changes.