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Which of the following techniques is NOT relevant to target costing?
a) Value analysis
b) Variance analysis
c) Functional analysis
d) Activity analysis
The correct answer is (b) variance analysis
Sir I don’t know about these analyses please explain what they are??
Is it also true that target costing is opposite of the cost-plus pricing technique? Could you please tell me what is cost plus pricing (I doubt I know but forgot it :))
Value analysis is analysing what customers find of value and will pay more for.
Functional analysis is analysing what operations are involved.
Activity analysis is analysing the various activities needed for for production.
It is too simplistic to regard target coasting sas being the opposite of cost plus pricing. I explain cost plus pricing in my free lectures – you cannot expect me to type them out again here 🙂