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Target costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Target costing

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by LMR1006.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 11, 2023 at 6:22 pm #693054
    weekly
    Participant
    • Topics: 38
    • Replies: 39
    • ☆☆

    Hello Sir. I’m having problem with this question from kaplan. Please help me.

    The following statements are all steps in the implementation of the target costing process for a product.
    1. Calculate the target cost.
    2. Calculate the estimated current cost based on the existing product specification.
    3. Set the required profit.
    4. Set the selling price.
    5. Calculate the target cost cap.

    What is the correct sequence if target costing were to be used?

    My answer is: 4,3,1,2,5
    The book answer: 2,3,4,1,5

    October 12, 2023 at 7:49 am #693062
    LMR1006
    Keymaster
    • Topics: 4
    • Replies: 1509
    • ☆☆☆☆☆

    You calculate/ estimate the current cost based on current specification

    You then decide what profit you want – you deduct this from the competitive price

    That gives you your selling price

    You now calculate your target cost

    (diff between this and the est cost) gives you

    The target cost gap

    October 12, 2023 at 2:12 pm #693071
    weekly
    Participant
    • Topics: 38
    • Replies: 39
    • ☆☆

    OK thank you for the help Sir

    October 12, 2023 at 3:49 pm #693074
    LMR1006
    Keymaster
    • Topics: 4
    • Replies: 1509
    • ☆☆☆☆☆

    Your most welcome

  • Author
    Posts
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