COST ACCOUNTING
MANUFACTURING OVERHEAD
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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direct costs + desired profit
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expected selling price-direct costs
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expected selling price-desired profit
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expected selling price + desired profit
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Detailed explanation-1: -The target cost for a job using job costing is calculated as: expected selling price-desired profit. A key idea in process costing that refers to the number of units that could have been started and completed given the costs incurred during the period is known as: Equivalent units of production.
Detailed explanation-2: -Target Costing. Target costing estimates product cost by subtracting a desired profit margin from a competitive market price. As the target cost makes reference to the competitive market, it is fundamentally customer-focused and an important concept for new product development.
Detailed explanation-3: -Under traditional costing system, Expected Selling Price = Estimated Cost + Required Profit But under Target Costing System, Target Cost = Target Selling Price – Target or Required Profit.