Posted: January 29th, 2023
Discuss which type of pricing (cost-plus or target costing) that you feel would be more accurate in determining the selling price for products as it relates to your future career.
Your journal entry must be at least 250 words in length. No references or citations are necessary.
SOLUTION
Target costing involves analyzing the desired cost of a product based on market demand and setting a target selling price, then reverse engineering the cost to ensure profitability. This approach takes into account market conditions, competition, and consumer behavior.
Cost-plus pricing, on the other hand, determines the selling price by adding a markup to the product’s production cost, which may not accurately reflect market demand or competition.
Therefore, for long-term success in determining the selling price for products, target costing is a more strategic and effective approach.
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