Chapter 14-3

Question 1

identifies an estimated price customers are willing to pay

Answer 1

target costing

Question 2

is computed to earn the desired profit

Answer 2

target cost

Question 3

starts with a target price, which is the estimated price for a product or service that potential customer are willing to pay

Answer 3

market based pricing

Question 4

managers base the target price estimate on 2 things

Answer 4

1. customers percieved value for a product or service
2. how competitors will price competing products or services

Question 5

a companys sales and marketing organization identifies customer needs and perceptions of product value thorugh

Answer 5

close contact and interaction with customers

Question 6

target cost per unit equation

Answer 6

target cost per unit =
target price - targer operating income per unit

Question 7

_____ include all future costs, variable costs as well as costs that are fixed in the short run

Answer 7

target costs

Question 8

systematic evaluation of all aspects of the value chain, witht he objective of reducing costs and achieving a quality level that satisfies customers

Answer 8

value engineering