Target costing process
You'll learn the target costing process and how to calculate target costs for new products. This technique helps organisations align production costs with market prices and profit goals—essential knowledge for Performance Management and cost management papers.
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In this lesson
- 0:00 Target Costing Process Overview
- 0:24 Calculating Target Cost Step by Step
- 1:10 Target Costing Worked Example
About this lesson
The video walks through the four-step process: setting a market-based selling price, determining your desired profit margin, calculating target cost by subtracting profit from price, and identifying the target cost gap. A worked example using a mood-changing alarm clock shows you exactly how to work backwards from selling price to find the cost you need to achieve, giving you a practical framework you can apply to any product costing scenario.
Duration: 3m
Transcript
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