Target Cost Is the Price That Customers Are Willing to Pay

question 5

True/False

Target cost is the price that customers are willing to pay and target price is the desired cost to produce the product.

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Definitions:

Marginal Product

The growth in productivity that occurs when an extra unit of input is added, with all other inputs remaining the same.

Profit

The financial benefit realized when revenue generated from business activities exceeds the expenses, costs, and taxes needed to sustain the operation.

Total Output

The total amount of goods and services produced within an economy at a given overall price level in a given time period.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of the operation and output increases.