Charter Corporation manufactures a single product that has a cost of $350. The company uses a 70% markup on cost to arrive at a selling price of $595, which results in a price that virtually always exceeds that of the market leaders. If Charter changes to the approach known as target costing, the company will first:
A. trim its $350 cost.
B. change the markup so that it is based on sales rather than based on cost.
C. attempt to re-engineer its product.
D. undertake a thorough study of competitors' prices.
E. reduce its 70% markup rate.
Answer: D
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