Kleenrite Company Manufactures a Single Product That Has a Cost

Multiple Choice

Kleenrite Company manufactures a single product that has a cost of $450. The company uses a 40% markup on cost to arrive at a selling price of $630, which results in a price that virtually always exceeds that of its competitors, the market leaders. If Kleenrite changes to the approach known as target costing, the company will first:

A) undertake a thorough analysis of competitors' prices.
B) change the markup so that it is based on sales rather than based on cost.
C) reduce its 40% markup rate.
D) trim its $450 cost.
E) attempt to re-engineer its product.