Which of the Following Statements Concerning Target Costing Is NOT

question 21

Multiple Choice

Which of the following statements concerning target costing is NOT true?

• A)Implementing target costing requires detailed information on the cost of alternative activities.
• B)Target costing can be applied to components of products as well as the new products as a whole.
• C)A primary advantage of target costing is that it requires little or no coordination among processes.
• D)Short product life cycles increase the importance of target costing.

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Definitions:

Guaranteed Residual Value

The minimum future value of an asset as guaranteed by a third party or agreement upon the asset's lease end.

Initial Direct Costs

Initial Direct Costs are expenses directly associated with negotiating and arranging a lease that are not included in the net investment in the lease.

Sale-leaseback

A transaction where an asset is sold and immediately leased back from the new owner, allowing the seller to continue using the asset while freeing up capital.

Depreciation Expense

The systematic allocation of the depreciable amount of an asset over its useful life, representing wear and tear or obsolescence.