Zielkostenrechnung

Description: Target costing is a cost management tool. It is used to determine how a product can be priced to ensure it is competitive. First, the desired profit is deducted from the target price (market price), then the maximum permissible manufacturing cost for the product is determined. Consequently, it is an inverse method of calculation. Several different pricing methods are commonly used. In the 'market-into-company' method, the starting point is the price that customers are prepared to pay for the product. In the 'out-of-competitor' method, the Production costs of other market actors are given heavy weighting. In the 'out-of-company' method, it is the costs of Design and production that determine the target costs, not the market. These methods can also be combined. Target costing supports market-based cost management.