question archive How does the target cost concept differ from cost-plus approaches? Discuss

How does the target cost concept differ from cost-plus approaches? Discuss

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How does the target cost concept differ from cost-plus approaches? Discuss.

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The target cost concept begins with a price that can be sustained in the marketplace, then subtracts a target profit, thus determining the target cost. The cost is made to conform to the price required in the market. In contrast, under cost plus, a markup is added to the cost. The resulting price is assumed to be acceptable in the market.

 

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