FROM THE QUESTIONS Below, SELECT ANY THREE AND PREPARE A CONCISE RESPONSE FOR EA
ID: 3357295 • Letter: F
Question
FROM THE QUESTIONS Below, SELECT ANY THREE AND PREPARE A CONCISE RESPONSE FOR EACH (at least 1 page long for each question), EXCLUSIVE OF CITATIONS, IF ANY
1. How would a manager use economic theory to maximize profit price for a service or product?
2. What is the process of target costing? How is target costing calculated?
3. Why is the time value of money important in financial planning and forecasting?
4. Distinguish between a Defined Benefit and a Defined Contribution retirement plan. What are the benefits and limitations of each....which do you prefer and why?
5. In engaging in due diligence for any investment, what types of factors and issues might you focus on? Are there "levels" of due diligence?
6. What is insolvency and how does the concept differ from continuous operations despite the balance sheet data?
Explanation / Answer
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2)
Target costing is a system under which a company plans in advance for the price points, product costs, and margins that it wants to achieve for a new product. If it cannot manufacture a product at these planned levels, then it cancels the design project entirely. With target costing, a management team has a powerful tool for continually monitoring products from the moment they enter the design phase and onward throughout their product life cycles. It is considered one of the most important tools for achieving consistent profitability in a manufacturing environment.
The primary steps in the target costing process are:
Formula
Where the profit margin is based on selling price, target total cost can be calculated as follows:
Target cost = selling price – profit percentage × selling price
Where the profit margin is based on cost, target cost can be found as follows:
So, TC = SP/(1 + Profit %)
Target cost = selling price/ 1 + profit percentageRelated Questions
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