An estimated cost per unit in long run, which enables the company to achieve it's per unit target, operating income is classified as ___________?
Correct answer: B. target cost per unit
- A. target operating income per unit
- B. target cost per unit
- C. total current full cost
- D. total cost per unit
Explanation
Target cost per unit is the estimated long-run cost that allows the company to earn its planned operating income at the target selling price. It is not the income figure itself.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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