Which of the Following Statements Is Consistent with Target Costing

question 8

Multiple Choice

Which of the following statements is consistent with target costing?

• A) It does not consider market share or sales volume.
• B) Market prices are used to determine product costs.
• C) Product design has little or no regard for the long-run manufacturing costs.
• D) It is described as a reactive costing strategy, rather than a proactive costing strategy.

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Definitions:

Sales on Account

Transactions where goods are sold and delivered with the understanding that payment will be made at a later date.

Average Collection Period

The average number of days it takes for a business to receive payments from its customers for invoices issued.

Accounts Receivable

Amounts owed to a company by customers for goods or services that have been delivered or sold but not yet paid for.

Sales on Account

Transactions where goods or services are sold with the understanding that payment will be made at a later date.