Comprehensive Overview of Target Costing Phases PPT

This PPT slide, part of the 23-slide Target Costing PowerPoint presentation, outlines the Target Costing process, emphasizing its role as a comprehensive cost reduction program rather than merely a technique for quantifying costs. It is divided into 3 main phases: Market-Driven Target Costing, Product-Level Target Costing, and Component-Level Target Costing.

In the first phase, Market-Driven Target Costing, the focus is on determining the selling price by analyzing market conditions and the entire industry value chain. This phase requires a thorough understanding of the firm's strategy and financial goals to set a desired profit margin. The selling price is then used to derive the allowable costs, which are essential for the subsequent phases.

The second phase, Product-Level Target Costing, shifts attention to the allowable costs. Here, the initial ballpark figure for cost savings is refined into an achievable target cost. This phase emphasizes designing products that meet customer needs while adhering to the allowable cost constraints. It highlights the importance of aligning product design with market expectations.

The final phase, Component-Level Target Costing, involves a cross-functional team that collaborates to reduce costs across various functions, including design, purchasing, and manufacturing. This approach underscores the necessity of a supplier-focused strategy to achieve component-level target costs effectively.

Overall, the slide conveys that executives must analyze costs throughout all phases of the product lifecycle to implement Target Costing successfully. It presents a structured approach that integrates market analysis, product design, and cross-functional collaboration, making it a vital consideration for organizations aiming to enhance profitability.

EXPLORE MORE SLIDES FROM THIS PRESENTATION

EXPLORE MORE PRESENTATIONS ON

Cost Reduction Assessment Costing Cost Reduction Product Lifecycle Market Analysis Value Chain Manufacturing