In target costing, prices determine costs rather than vice versa." Explain. Question content area bottom Part 1 A. In target costing, managers start with a predatory price. Then they determine how much they can spend in variable and fixed costs to breakeven. Thus, prices essentially determine costs. B. In target costing, managers start with a price that will result in breakeven. They the managers brainstorm to find ways to lower costs without raising the price to earn more profit. Thus, prices essentially determine costs. C. In target costing, managers start with a market price. Then they try to design a product with costs low enough to be profitable at that price. Thus, prices essentially determine costs. D. In target costing, managers start with a cost-plus price. Then they work backwards to determine how much their costs are for production and the markup is on the product. Thus, prices essentially determine costs.
In target costing, prices determine costs rather than vice versa." Explain. Question content area bottom Part 1 A. In target costing, managers start with a predatory price. Then they determine how much they can spend in variable and fixed costs to breakeven. Thus, prices essentially determine costs. B. In target costing, managers start with a price that will result in breakeven. They the managers brainstorm to find ways to lower costs without raising the price to earn more profit. Thus, prices essentially determine costs. C. In target costing, managers start with a market price. Then they try to design a product with costs low enough to be profitable at that price. Thus, prices essentially determine costs. D. In target costing, managers start with a cost-plus price. Then they work backwards to determine how much their costs are for production and the markup is on the product. Thus, prices essentially determine costs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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"In target costing, prices determine costs rather than vice versa." Explain.
Question content area bottom
Part 1
In target costing, managers start with a predatory price. Then they determine how much they can spend in variable and fixed costs to breakeven. Thus, prices essentially determine costs.
In target costing, managers start with a price that will result in breakeven. They the managers brainstorm to find ways to lower costs without raising the price to earn more profit. Thus, prices essentially determine costs.
In target costing, managers start with a market price. Then they try to design a product with costs low enough to be profitable at that price. Thus, prices essentially determine costs.
In target costing, managers start with a cost-plus price. Then they work backwards to determine how much their costs are for production and the markup is on the product. Thus, prices essentially determine costs.
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