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:

Average Collection Periods

The average number of days it takes for a business to receive payments owed by its customers.

Uncollected

Refers to funds or debts that have not been received or recovered by the due date.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Net Profit Margin

A financial metric that shows the percentage of a company's revenue that remains as net income after operating expenses, interest, taxes, and preferred stock dividends have been deducted.