24
TARGET COSTING
What is this practice and how effective is it?
Japanese lean manufacturers have used target costing for many years to set prices and manage costs. There are many differences between “target” costing and “standard” costing. Whereas standard costing is used to calculate unit costs and value inventory (cost-led pricing), target costing is used to set prices over the lifetime of a product family and then set a target cost that managers must stay within to achieve the return on capital required (price-led costing). We will examine these differences in approach in more depth.
Alternative names and related topics: lean manufacturing; product costing; activity-based costing; profit planning
The basic principle underlying most of the ...
Get Beyond Performance Management now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
