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Increase in selling price to reduce or close target cost gap

NNodirbek5y ago
Dear Sir, Could you please explain why is that a change in selling price won't reflect the target cost gap? as an example of it see the revision kit part below: Question asks which of the following represents a possible method for closing the target cost gap for the webcam? - Increase its selling price - Employ more specialist staff in its production - Redesign the webcam - Increase the number of bespoke components and the answer is: Redesign the webcam Changes to selling price will have no effect upon target cost. The remaining options (employ more specialist staff; increase the number of bespoke components) would serve to increase the target cost gap rather than decrease it. If a product cannot be made within the target cost, so that a cost gap exists, the targets must be reduced, or the product redesigned. Could you please explain why change in SP of lets say $40 to 30$ won't have an effect on target cost gap?
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