Target Costing is a proactive Cost Planning, Cost Management, and Cost Reduction practice. Costs are planned and managed out of a product and business early in product life-cycle, rather than during the later stages.
Target Costing is an organized process to determine the cost at which a proposed product must be developed so as to generate profits at the product's anticipated selling price in future.
This presentation provides a detailed overview of the Target Costing Process and its 3 key phases:
1. Market-Driven Target Costing
2. Product-Level Target Costing
3. Component-Level Target Costing
This deck also deliberates on the key features and advantages of Target Costing, the factors influencing the approach, and its applications in various industries. Target Costing is a superior approach to Cost Reduction and Control.
The slide deck also includes some slide templates for you to use in your own business presentations.
Target Costing is essential for maintaining profitability in a competitive marketplace. This framework emphasizes the importance of setting cost targets early in the product development process to ensure that the final product meets market demands while achieving desired profit margins. By focusing on cost management from the outset, companies can better control expenses and optimize resource allocation.
This presentation also highlights the role of cross-functional teams in achieving target costs. Integrating activities such as design, procurement, and manufacturing ensures that all aspects of the product lifecycle are aligned with cost objectives. The included templates provide practical tools for implementing Target Costing in your organization, making it easier to apply these principles and drive cost efficiency.
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Source: Best Practices in Cost Reduction, Cost Management, Cost Analysis PowerPoint Slides: Target Costing PowerPoint (PPTX) Presentation Slide Deck, LearnPPT Consulting
This PPT slide presents a visualization of the concept of Target Costing, emphasizing its role as a financial goal for managing the total cost of a product throughout its lifecycle. The key elements include the current market price, actual cost, and the desired profit, which collectively inform the target cost that must be achieved.
The left side of the slide illustrates the relationship between current market price and actual cost, highlighting the profit margin. The term “Drift” suggests a potential misalignment between the actual cost and the expected market price, indicating that adjustments may be necessary to maintain profitability. The required cost reduction is a critical focus, as it underscores the need for efficiency in production processes.
On the right side, the expected market price and desired profit are outlined, leading to the establishment of the target cost. This segment indicates that the market forces dictate the selling price, which necessitates proactive measures in the design and development phases to ensure that the product can be produced within the target cost parameters.
The slide effectively communicates the importance of aligning product costs with market expectations to sustain profitability. It emphasizes that achieving the target cost is not merely a financial exercise, but a strategic imperative that influences design decisions and operational efficiencies. This approach can help organizations navigate market fluctuations and enhance their overall financial performance. Understanding this framework is crucial for executives aiming to optimize product development and cost management strategies.
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