Which of the following is calculated by taking the selling price of the buyer’s end product and subtracting the required profit?

Which of the following is calculated by taking the selling price of the buyer’s end product and subtracting the required profit?
A . Total cost
B . Target cost
C . Allowable cost
D . Should cost

View Answer

Answer: B

Explanation:

Target cost is determined by subtracting the required profit margin from the selling price of the end product. This calculation helps in setting a cost benchmark that guides the firm’s production and pricing strategies, ensuring profitability while meeting market price points.