Question

True or false

-In target costing, effort is concentrated on effectively marketing the product to maximize its selling price.

-Price elasticity measures the degree to which consumers resent an increase in price.

-The price elasticity of demand is NOT used to determine the markup over cost when computing the profit-maximizing price.

-Most of the opportunities to reduce the cost of a product come from designing the product so that it is simple to make, uses inexpensive parts, and is robust and reliable.

Answer 1

1) False, as in target costing, effort is concentrated on reducing product life cycle cost so that required profit can be earned.

2)True, price elasticity measures the degree to which consumers resent an increase in price.

3)False, as Price elascity of demand is used to determine the markup over cost when computing the profit maximizing price

4)True,most of the opportunities to reduce the cost of a product come from designing the product so that it is simple to make, uses inexpensive parts, and is robust and reliable