Question

RTP Corp. is developing a new computer processor to compete against Intel's successful product
line. RTP has already determined the market price and the required profit margin on each processor sold in
order to be successful. Which costing method will RTP most likely use to reduce costs and obtain the desired
results?

A) Target costing.
B) Product costing.
C) Relevant costing.
D) Cost management.
E) Life cycle costing.

Answer 1

Answer: Target Costing

Explanation:

Target Costing is a method of costing on a product done while it's still being produced to determine the best price at which the product can be sold that would be able to compete with price of other similar products in the market and still make profit for the company.

RTP Corp needs to apply target costing for it's new computer processor in order for it to be profitable and beat the price of other processors in the market.