In target costing, which of the following would be a legitimate strategy to reduce a cost gap for a product that existed in a competitive industry with demanding shareholders?
A、Increase the selling price
B、Reduce the expectation gap by reducing the selling price
C、Reducing the desired margin on the product
D、Mechanising production in order to reduce average production cost
A、Increase the selling price
B、Reduce the expectation gap by reducing the selling price
C、Reducing the desired margin on the product
D、Mechanising production in order to reduce average production cost
【参考答案及解析】
Answer A is not correct: increasing the selling price is not possible, the industry is competitive so product will not sell effectively at higher prices. Answer B (‘Reduce the expectation gap by reducing the selling price’) is not target costing. Answer C (‘Reducing the desired margin on the product’) is not possible either: shareholders are demanding and would expect a good return.
Answer A is not correct: increasing the selling price is not possible, the industry is competitive so product will not sell effectively at higher prices. Answer B (‘Reduce the expectation gap by reducing the selling price’) is not target costing. Answer C (‘Reducing the desired margin on the product’) is not possible either: shareholders are demanding and would expect a good return.