Q353
Target price is subtracted from per unit target operating income to calculate
A.
total current full cost
B.
total cost per unit
C.
target operating income per unit
D.
target cost per unit
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Target price is subtracted from per unit target operating income to calculate target cost per unit. The target cost of a product is the expected selling price of the product minus the desired profit from selling it. In other words, target cost is really a measure of how low costs need to be to make a certain profit.