Management Accounting Information Helps Managers Calculate a Target Cost for a Product

question 49

Multiple Choice

Management accounting information helps managers calculate a target cost for a product ________.

• A) by subtracting from the target price the operating income per unit of product that the company wants to earn
• B) by subtracting from the target price the net income per unit of product that the company wants to earn
• C) by subtracting profit margin per unit from the target price of product that the company wants to earn
• D) by adding the operating income per unit and the contribution margin per unit

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Definitions:

Accounting Cycle

The process of recording, classifying, summarizing, and reporting a company's financial transactions through the accounting period.

Journalize

The process of recording transactions in a journal, marking the first step in the accounting cycle.

Post-Closing Trial Balance

Prepared as an additional step in the accounting cycle to check that debits equal credits and all temporary accounts have been closed (have zero balances).

Insurance Policy

A contract between an insurer and a policyholder that specifies the terms and conditions under which the insurer will compensate the policyholder for loss.