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Dear Sir,
Can u pls explain how the Target Costing calculated ?
What does this mean “mark-up is 20% of cost ???
I checked the answers at the back of notes but still dont understand why TC calculated as 100/120×600 ???
please explain.
Thanks.
For every 100 cost,the profit is 20 and therefore the selling price is 120.
Or, writing it the other way round, for every 120 selling price the cost is 100.
So if the selling price is 600 then the cost is 100/120 x 600
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