The following points highlight the two main examples of target costing. The examples are: 1. Tata Rs 0.1-Million Car 2. Tata Rs 0.1-Million Car- Potential Competition. Example # 1. Tata Rs 0.1-Million Car: On 11 March 2003 Business Standard reported the following: Ratan Tata, chairman of India's second-largest and longest-established conglomerate, said, he is pressing ahead with a project to [...]
Target costing is a structural approach to determine the cost at which a proposed product with specified function and quality must be produced, to generate a desired level of profitability at its anticipated selling price. In other words, Target Costing is a cost management tool for producing overall cost of product over its entire life cycle with the help of [...]
The upcoming discussion will update you about the difference between traditional costing and target costing. 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 product's characteristics that will meet the customer's needs. This will be [...]