# Which of the following best describes “target costing”?

1) option d. In Target costing we deduct profit margin from selling price to arrive at Target cost. All other options provide irrelevant information.

2) Process F

Normal loss = 65000*8%=5200

Input after normal loss = 65000-5200= 59800

Output= 58900

Abnormal loss = 59800-58900=900

Process G

Normal loss =37500*5%=1875

Input after normal loss =35625

Output=35700

Abnormal gain= 35700-35625 = 75

3) the profit will be 36000 only.

4) difference in prices charged since one company is regulated by government & cannot charge more than price specified by government whereas other company can price according to its own desire.

5) random sampling is the sampling in which every member has a chance of being selected randomly

6)Next year production of finished good will be = 3000+19000-4000= 18000

Each unit require 8kg of Raw Material so 18000 uts will require 18000*8= 144000

For raw materials I have 50000kg in stock . I will require 144000kg in total to produce 18000kg. So I have to purchase = 144000-50000+53000= 147000kgs

7) option a is correct.

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