If your goal in an organization was to ensure that sales revenue is maintained at a minimum 50% more than the product cost at a the unit level, what product costing method would you be more incline to propose and why?
As the goal is to ensure that the costs are atleast 50% less than the sales revenue. The recommended costing method would be Target costing.
Target costing: Target costing can be defined as a method of costing wherein a target cost for products are set and achieved based on a particular target.
In the above scenario, the target cost is 50% less than sales revenue.
Below is the process of target costing:
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