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traditionally cost plus procedure were used means at the time of pricing the product we accumulated the cost(direct material+direct labor+direct expenses+variable production OH+fixed production OH)that has to be incurred in order to produce the product and determined the cost per unit and then add the profit margin to reached at the selling price this method of costing is precised for its simplicity but in 1960 the concept of target costing were introduced which tells us the opposite approach as compared to the traditional costing in target costing we starts from the market survey and determine at what selling price costumer is agree to buy the product which we want to produce after determining the selling price of the product we subtract the desired profit which we want to achieve from it(competitive selling price-desired profit=target cost)
after subtracting the desired profit from the selling price we left with the cost termed as the TARGET COST.
after setting of the target cost we look all the budgeted cost if budgeted cost is greater than the target cost we apply all the cost saving techniques to control the budgeted cost and keep the budgeted cost into the limits of target cost...
(ANSWERED BY ARSALAN IDREES)
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What is target marketing used for?
Target marketing is used for exactly what it implies. A specific buying group or audience is targeted with advertisements about specific products and services.
What is a skimming strategy?
Price skimming is setting a high price for an item and then lowering the price over time. This is used on products that are in short supply with high demand.
What is a price pack?
Price pack is a sales promotion strategy whereby products come with labelled prices on the packs. This is often used when there are price reductions to appeal to consumers.
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Predatory pricing is what you call a pricing strategy where you offer the same products and services for a lesser price than your competitors.
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major strategies used for pricing imitative and new products depends on two factors i.e. price and quantity The strategies are: Premium Strategy= when price charged is high and Quantity supplied is also high Good Value Strategy= when price is low and quantity is high Overcharging strategy= when price is high and quantity is low eg: Maruti Versa Economy strategy= When both price and quantity are low major strategies used for pricing imitative and new products depends on two factors i.e. price and quantity The strategies are: Premium Strategy= when price charged is high and Quantity supplied is also high Good Value Strategy= when price is low and quantity is high Overcharging strategy= when price is high and quantity is low eg: Maruti Versa Economy strategy= When both price and quantity are low
What is the explanation for the role of target costing?
Target Costing refers to the design of product, and the processes used to produce it so the ultimately the product can be manufactured can be manufactured at a cost that will enable the firm to make a profit when the product is sold at an estimated mark driven price . This estimated price is called the target price.
How can standard costing help management in determining performance of a manager?
Standard costing is a set target where it is used as a goal to monitor progress
Role of target costing?
Target costing refers to the design of a product and the processes used to produce it , so the ultimately the product can be manufactured at a cost that will enable the firm to make a profit when product is sold
What is the difference between process costing and operation costing?
Process costing and operational costing systems are used in accounting, usually in relation to the manufacturing sector. Both refer to the costs of production, but they differ in terms of methodology and application. Process costing is used in industries where the products are all basically the same, such as bricks or cement. Operational costing, on the other hand, is used in industries where the products are similar but may have some variation in terms parts or the quality of materials.
What are the uses of standard costing?
Standard costing is for improving cost /cost control, simplify stock valuation and improving costing and pricing of products. Can be applied to jobs, operations, processes and department and are used in manufacturing, engineering, processing and service industries.
What is the price of a 3ds at target?
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What is target marketing used for?
Target marketing is used for exactly what it implies. A specific buying group or audience is targeted with advertisements about specific products and services.
Which method of costing is used in printing press?
process costing
Which costing method is used for external reporting purpose?
absorption costing
Standard costing vs marginal costing?
The average cost is the total cost of production of x units of the product divided by x. Marginal cost refers to the additional amount required to produce the x+1th unit. This does not have to be the average of the cost of x units. For example if a company can produce 1000 products a day for $5000, the average cost is $5. But to make 1001 products per day it may not be possible to do the same with the machinery they have, instead they may need to buy additional machinery. If this makes the cost of producing 1001 products $5020, the marginal cost of the 1001th product is $20. It is the first derivative of total cost with respect to the quantity. This makes marginal cost independent of the fixed cost and dependent only on the function of the variable cost.
What are the Principles of target costing?
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What is target groups?
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