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Target Costing Question

Forums › ACCA Forums › ACCA PM Performance Management Forums › Target Costing Question

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 20, 2021 at 4:17 am #638556
    kish200
    Participant
    • Topics: 22
    • Replies: 45
    • ☆☆

    I wanted to ask, there are 2 ways of getting the required profit target (depending on the question) one is to calculate as a percentage of selling price and the other is to calculate as a percentage of the cost.
    I am a little confused about how do you determine which method is needed?
    Sometimes the question will say “Profit margin is 20%” or “Profit markup is 20%” so I always get confused in figuring out how to calculate the profit

    October 20, 2021 at 8:07 am #638572
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51582
    • ☆☆☆☆☆

    In future you must ask in the Ask the Tutor Forum if you want me to answer. This forum is for students to help each other 🙂

    Unless the question specifically says differently, then the profit margin is the profit as a % of the selling price, whereas the profit markup is the profit as a % of cost (as was the case in Paper FA (was F3))

    October 20, 2021 at 3:51 pm #638610
    kish200
    Participant
    • Topics: 22
    • Replies: 45
    • ☆☆

    Noted.
    Thank you so much

    October 20, 2021 at 4:29 pm #638618
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51582
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Target Costing Question’ is closed to new replies.

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