Which of the following stores is an example of target costing?

Target costing is a pricing strategy in which a retailer sets a target cost for a product and then works backward to achieve that cost by analyzing the features, production costs, and desired profit margin. This approach is often used by retailers that cater to cost-conscious consumers, focusing on providing products at competitive prices while managing expenses.

Dollar stores exemplify target costing because they typically offer low-priced goods and must maintain tight control over costs to sustain their low-margin business model. The pricing of items in dollar stores is usually based on what the market can bear at low price points, pushing these retailers to streamline their operations and cut unnecessary costs to meet their financial goals.

In contrast, high-end department stores, luxury boutiques, and online marketplaces generally do not operate under a target costing strategy. High-end department stores and luxury boutiques often focus on premium pricing models, where the perceived value and brand quality drive pricing, rather than achieving a predetermined cost. Online marketplaces may offer a variety of pricing strategies, but they do not typically manifest target costing in the same manner as dollar stores, which are explicitly designed around maintaining specific low price points to attract budget-minded customers.