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Target costing is a strategic approach used in business to determine the ideal cost of a product while maintaining its quality, functionality, and market competitiveness. This method focuses on designing products with specific target costs in mind by integrating cost management with product design, manufacturing processes, and supply chain management. Target costing involves three main steps: setting the target cost, analyzing the current product cost, and identifying and implementing cost-saving measures to close the gap between the current and target costs. By adopting this technique, companies can optimize resource allocation, enhance efficiency, and improve overall profitability while delivering high-quality goods that meet customers' expectations.