Overview
In this overview lesson, you'll learn what target costing is and why it matters for your studies. Target costing is a specialised cost accounting technique that reverses the conventional pricing process—instead of setting a cost and adding profit, you start with the target selling price and work backwards to determine
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In this lesson
- 0:00 Target Costing Overview
- 0:36 What Is Target Costing
- 1:10 Reversing the Pricing Process
- 1:47 Driving Efficiency and Innovation
About this lesson
the maximum allowable production cost. This approach helps organisations stay competitive while achieving their profit objectives by factoring in market demand and competitor pricing. The lesson covers four key areas: the fundamental concept of target costing, the step-by-step process involved, the critical gap-closing phase using value analysis, and how target costing applies differently in service industries compared to manufacturing. You'll understand how this technique incentivises organisations to drive efficiency and innovation, ultimately enhancing both competitiveness and profitability. This is essential knowledge for your Performance Management or Advanced Performance Management studies, where target costing frequently appears in both objective tests and case study scenarios.
Duration: 2m
Transcript
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