The primary difference between target costing and traditional cost-based pricing

Question

The primary difference between target costing and traditional cost-based pricing is
a. traditional cost-based pricing is designed to appeal to any customers, but target costing targets specific customers.
b. traditional cost-based pricing considers the market that is available for the product at the end of the process, whereas target costing considers the market at the beginning of the process.
c. product costs are irrelevant under traditional cost-based pricing, but are very important under target costing.
d. product costs are irrelevant under target costing, but are very important under traditional cost-based pricing.

Explanation / Answer

The primary difference between target costing and traditional cost-based pricing is

a. traditional cost-based pricing is designed to appeal to any customers, but target costing targets specific customers.

b. traditional cost-based pricing considers the market that is available for the product at the end of the process, whereas target costing considers the market at the beginning of the process. correc answer

c. product costs are irrelevant under traditional cost-based pricing, but are very important under target costing.
d. product costs are irrelevant under target costing, but are very important under traditional cost-based pricing.

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