question archive How does the target cost concept differ from cost-plus approaches? Discuss
Subject:AccountingPrice:2.89 Bought3
How does the target cost concept differ from cost-plus approaches? Discuss.
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.