target costing

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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September 24, 2017 at 6:40 am #408462
adarsh1997
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Hi John!

When deciding a target cost and target SP, does a company:
1. Looks at the sales demand or level of production first and then decide the target selling price

OR

2. Decides on a target SP first and then decide how many units to sold.

Thanks.
September 24, 2017 at 10:05 am #408482
John Moffat
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They will look at the two things together (because the selling price is likely to affect the demand).
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