Week 5 Flashcards
1
Q
What is a value-added cost?
A
A cost that customers perceive as adding value or utility to a product or service, such as features like reliability or ease of use.
2
Q
Define a non-value-added cost.
A
A cost that does not add value or utility to a product from the customer’s perspective, such as rework or unnecessary repairs.
3
Q
What is the target-costing approach?
A
A pricing strategy that begins with a target price based on customer expectations and competitive pricing, then derives a target cost to meet profit goals.
4
Q
What is cost-plus pricing?
A
It is a pricing method that adds a markup to the cost base to determine the selling price
