Overview

Target costing is a method used by a company's management to control product costs considering the market conditions. Some common factors that could impact the market price include the homogeneity of products, intensity of rivalry, and switching costs for customers.

Because companies have little to no control over the market prices, they would focus on tight cost control and effective cost planning to maximize their profits. The formula for calculating the target cost is as follows:

Targeting Costing = Selling Price - Profit Margin

Share
Reviews Add a review
No reviews yet

More From Corporate Finance Institute®

Browse our top rated business templates. See All
REIT Financial Model Template
747
2
This REIT financial model template acts as a guideline for modeling a real estate investment trust (REIT). This model will…
Energy Industry Comps Template Energy Industry Comps Template
1,807
99
This energy industry comps template provides a guideline and example of what a comparables universe would look like for a…
Financial Institution Dividend Discount Model
2,385
112
The financial institution dividend discount model uses future dividends to find the implied share price. This model is based on…
Loan Payment Calculator
2,041
0
The loan payment calculator allows users to determine the principal and interest payment each month until the full balance of…
DDM - Excel Dividend Discount Model Template
2,225
156
The dividend discount model template allows investors to value a company base on future dividend payments. This is based on…
Non-directional trading strategy template Non-directional Trading Strategies Template
1,812
0
The non-directional trading strategies template allow users to determine the profit when buying options. This template focuses on non-directional strategies…
See All