All of the Following Are Steps of Target Costing Except

question 46

Multiple Choice

All of the following are steps of target costing except:

• A)maximizing the contribution margin per unit of constrained resource.
• B)engineering the product to achieve the target cost.
• C)designing a product that provides the features and price demanded by customers.
• D)deriving the target cost by subtracting the desired profit.
• E)None of the answer choices is correct.

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Definitions:

Acid Test Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its quick assets.

Current Liabilities

Short-term financial obligations that are due within a year or within the operating cycle.

Average Inventory

The inventory average calculated by summing each inventory valuation (determined by physical inventory) and dividing by the number of physical inventories over a specified period of time; average annual inventory equals (beginning inventory value plus ending inventory value) divided by 2.

Ending Inventory

The total value or amount of goods available for sale at the end of an accounting period, calculated using inventory accounting methods.