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Target Costing

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Erin Tague

on 17 August 2013

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Transcript of Target Costing

Target Costing: An Alternative Approach to Cost Reduction
by Erin Tague

Target Costing:
An Alternative Approach to Cost Reduction

What is Target Costing
Traditional Cost Reduction Approach
Target Costing Approach
Pros and Cons
Traditional Approach
Market Research
Target Costing Approach
Market Research
Pros and Cons
of Target Costing
What is Target Costing?
- Customer-driven
- Costs identified early
- Less risk
- Improved customer satisfaction
- Increased ability to compete
- Not beneficial within service industries
- Length of development cycle
- Lack of cross-functional teamwork
- Employee burnout
- Difficult to implement
- Target Costing is effective
- Not widely known or used in the U.S.
- Is not conducive to service/labor industries
- Is ideal for companies providing consumer goods
Production Specification and Design
Target Selling Price
Target Profit
Target Cost
Value Engineering
Supplier Cost Reduction
Continuous Cost Reduction
Product Specification
Supplier Pricing
Estimated Cost
Expected Selling Price - Estimated Cost
Periodic Cost Reduction
"The Target Costing Bull's Eye, Part One of a Series"
Business Finance

"Target Costing"
Accounting Tools

Management Accounting
6th Edition
Atkinson, Kaplan, Matsumura, Young
Full transcript