Which of the Following Is a Disadvantage of Using Target

question 200

Multiple Choice

Which of the following is a disadvantage of using target costing?

• A) It may lead to an increase in all the non-value added cost of the product
• B) It may lead to a product being in development stage for a long time as the team repeatedly evaluates alternative designs.
• C) It may lead to increased employee participation in the cost reduction process of the organization thereby making it impossible to co-ordinate the process.
• D) It eliminates creativity in the manufacturing process as the focus is always on cost reduction and cost elimination.

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Definitions:

Factor 1

Represents the primary variable or input used in the production of goods or services, typically labor or capital.

Long-Run Cost Function

A representation of how the total production cost of a firm changes with output in the long run, when all inputs can be varied.

Positive Output

The production of goods or services in an amount greater than zero, indicating activity or productivity in economic terms.

Total Cost

The aggregate of expenses related to the creation of goods or services, which includes fixed costs and variable costs.