Sir when calculating current estimated cost of a product(for comparing it with the target cost) then are there any costs that are left out? Like opportunity cost? deprn cost? notional costs?
Really sorry for bothering you so much sir.
I would honestly not trouble you after 16th(hopefully, if I pass), just bare with me for 3more days!
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target costing
5y ago#1Opportunity costs are not relevant. Otherwise it is all the expected extra unit costs of producing the new product.
sir just to reconfirm are there any costs which would be excluded from expected cost of a product(when using target costing)? Any exceptions? apart from opportunity cost and sunk cost(both of which would be excluded).
notional costs of capital, allocated costs, committed costs , deprn, non-production overheads all included.
just to be double sure, am not missing out on anything.
5y ago#3Notional cost of capital is of no relevance.
I cannot give you a list - it depends on the information in the question. I assume that you have attempted all the target costing questions in your Revision Kit?
Have you watched the lecture on target costing yet?
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