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Lyman Currently Sells an Industrial Mixer for $900 That Market

Question 59

Multiple Choice

Lyman currently sells an industrial mixer for $900 that market leaders sell for $820. The current costs to manufacture and distribute the mixer total $645, and the company has a profit goal of 30% of sales. Lyman uses target costing in its efforts to be a leader in the marketplace. On the basis of this information, (1) what should Lyman consider to be the initial driver of the target-costing process and (2) what amount of cost reduction is needed for the company to achieve its goals? Lyman currently sells an industrial mixer for $900 that market leaders sell for $820. The current costs to manufacture and distribute the mixer total $645, and the company has a profit goal of 30% of sales. Lyman uses target costing in its efforts to be a leader in the marketplace. On the basis of this information, (1) what should Lyman consider to be the initial driver of the target-costing process and (2) what amount of cost reduction is needed for the company to achieve its goals? A) Choice A B) Choice B C) Choice C D) Choice D E) Choice E


A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E

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