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good day sir,
in target costing in order to reduce cost gap we cannot change selling price because that is in reference to the market but can we change the profit margin in order to meet the cost gap?There is nothing to stop us changing either, although, as you have written, increasing the selling price would likely mean that we would not sell any. They certainly may end up deciding to reduce their target profit.
However the primary objective in target costing is to reduce the costs in order to meet the target profit, as I explain in my free lectures on this.
The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
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