Target Costing Calculation and Economic Gain for Companies

Abstract

This paper deals about the problematic of target costing implementation into the managerial decisions. These decisions make value analysis principles for increasing in competitiveness by the setting off limits for maximum allowable costs which should not exceeded by company manufacturing. By this approach is possible to improve product quality, service, shortening the research and development period and continual effort to lower costs. Target costing as a modern method of calculation uses the principles of value analysis, by using instruments of functional cost analysis and quantitative-function deployment can provide a functional differentiation of the product. This approach has a high importance for quality assurance in pre-production phase and it's increasing. Application of target costing is growing in praxis still. Target costing calculation introduce system approach to quantify costs of product in the phase of constructive and development activities of production. Comparison target costing calculation and traditional calculation show target gap. Target costing calculation is new modern instrument that it facilitates to manage price of product by the customers’ requirements. The price is determined by market and customer's needs. In this phase is possible to fix costs of product. In praxis we often meet with situation where the price of product is very high and customer is not ready to pay so much. Target costing calculation limits cost of production.

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