تقييمات الطلاب
( 5 من 5 )
١ تقييمات
فيديو شرح Target Costing Price Takers. Cost Accounting & Managerial Accounting Courses. CPA Exam BAR. ضمن كورس محاسبة التكاليف شرح قناة Farhat Lectures. The # 1 CPA & Accounting Courses، الفديو رقم 34 مجانى معتمد اونلاين
What is target costing and how do price takers use it? In this cost accounting lesson for CPA BAR and CMA candidates, Professor Farhat explains target costing — how a company that cannot set its own price starts from the market price, subtracts the desired profit, and works backward to a maximum allowable target cost. Includes worked examples and a contrast with cost-plus pricing. Great for cost and managerial accounting students.
Try it free at farhatlectures.com — interactive exercises, lectures, simulations, cases, multiple choice, and AI tools for CPA, CMA, EA and students.
Video Timeline & Key Concepts:
0:00 — Introduction
0:24 — Price takers vs price setters
1:35 — The target costing formula
2:39 — Example: product with a market price of $21
5:00 — Example: headphones with a market price of $149
Frequently Asked Questions:
What is target costing?
Target costing is a pricing and cost management approach where the market sets the selling price, and the company subtracts its desired profit to determine the maximum cost it can incur. The product is then designed and produced to meet that target cost.
What is the target costing formula?
The target cost equals the market-driven target price minus the desired profit. If a company cannot produce the item at or below that target cost, it must accept a lower profit, differentiate the product, or re-engineer its process.
What is the difference between target costing and cost-plus pricing?
In target costing the market sets the price and the company works backward to an allowable cost, while in cost-plus pricing the company starts from its cost and adds a markup to set the price. Target costing suits price takers, and cost-plus suits price setters.
Who uses target costing?
Target costing is used by price takers — companies selling non-unique products in competitive markets where they cannot dictate price. They must control costs to earn a profit at the market price.
What can a company do if it cannot meet the target cost?
If production costs exceed the target, the company can redesign or re-engineer the product, find efficiencies in materials, labor, or overhead, accept a lower margin, or differentiate the product to command a higher price. Meeting the target cost is key to profitability.
#CPAexam #CMAexam #enrolledagentexam #accountingcourses #collegecourses #courses #BAR #targetcosting #pricing #costaccounting #ProfessorFarhat #accountingstudents