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Manual in English and some Swedish by Joakim Forsgren

A target cost is the allowable amount of cost that can be incurred on a product and still earn the required profit from that product. It is a market driven cost that is computed . before. a product is produced. A budgeted cost is a predetermined cost . after a product is in production.

Target costing quizlet

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Manual in English and some Swedish by Joakim Forsgren

Target cost. Target cost is the cost at which a product must be produced and sold in order to achieve the required amount of profit at the target selling price. 1.

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If a company has a more unique item, that consumers are willing to pay a premium for, cost-plus pricing can be effective. Target costing can be contrasted with cost-plus pricing, in which companies set price by adding a profit margin to whatever cost they incur. Target costing is a more effective approach because it emphasizes efficiency in order to keep costs low. Target costing is particularly useful in industries that have low profit margins and high competition.
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Top management sets the desired level of profit on the basis of firm strategy and financial goals. In many cases, the target profitability is based on Definition of target costing in the Definitions.net dictionary. Meaning of target costing. What does target costing mean? Information and translations of target costing in the most comprehensive dictionary definitions resource on the web.