Tag Archives: Target Costing

Target costing and lifecycle costing can be regarded as relatively modern advances in management accounting, so it is worth first looking at the approach taken by conventional costing. Typically, conventional costing attempts to work out the cost of producing an item incorporating the costs of resources that are currently used …

The primary objective of target costing is to enable management to use proactive cost planning, cost management, and cost reduction practice whereby, costs are planned and managed out of a product and business, early in the design and development cycle, instead of during the later stages of product development and production. …

Traditionally, manufacturers would make use of the cost-plus approach to estimate the product price. A starting point for them would be to conduct market research to determine its market segment’s preferences and hence its products’ characteristics that will meet the customer’s needs. This will be followed by the design of …