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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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"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.
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