Price-based or Target Costing

Please choose the most appropriate answer for each sentence.
  • 1

    The target cost is a financial goal for the full cost of a product, ..... from estimates of selling price and desired profit (which top management sets on the basis of firm strategy and financial goals).

  • 2

    Product selling price is ..... by the marketplace and is determined by analysis along the entire industry value chain and across all functions in a firm.

  • 3

    ..... to most target-cost applications is a belief that large-scale cost planning and reduction must occur early in the product life cycle.

  • 4

    However, Shank and Fisher believe there is no ..... reason the methodology cannot be a value-added exercise applied to existing products during manufacturing.

  • 5

    They ..... that if managers were to believe that, during manufacturing, only incremental (i.e., slight) change is possible, firms would likely miss significant strategic opportunities.

  • 6

    Shank and Fisher present a case study that demonstrates the relevance of target-costing techniques for a process-industry plant built in the 1890s that had been making ..... the same products for fifty years.

  • 7

    The firm's managers, who had used a standard-cost system for many years, might have concluded that ..... costing was most appropriate for this plant.

  • 8

    However, competitive realities necessitated a major strategic change that employed target costing as an important ..... in cost-reduction efforts leading to strategic revitalization.

  • 9

    The standard cost concept essentially dropped out of the ......

  • 10

    Because standard costing accepts the existing game rules and the existing value chain, the authors believe that fundamental cost ..... are much more probable when using target costing.

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