Target Costing Toyota Motor Corporation
Ex 24:19 Target costing
Toyota Motor Corporation uses target costing. Assume that Toyota
marketing personnel estimate that the competitive selling price for the Camry
in the upcoming model year will need to be $27,000. Assume further that the
Camry’s total unit cost for the upcoming model year is estimated to be $22,500
and that Toyota requires a 20% profit margin on selling price (which is
equivalent to a 25% markup on total cost).
a. What price will Toyota establish for the Camry
for the upcoming model year?
b. What impact will target costing have on
Toyota, given the assumed information?
a. The price will be set at the estimated market price required
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