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Forums › ACCA Forums › ACCA PM Performance Management Forums › Target Costing Question
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
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))
Noted.
Thank you so much
You are welcome 🙂