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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › target cost gap
will increasing profit margin reduce the target cost gap ?
No – it will reduce the target cost and therefore increase the gap!!
As I explain in my free lectures on this, if they cannot find ways of eliminating the cost gap then they might decide to accept a lower profit margin rather than not produce the product at all. However this is not the actual aim of target costing.
