Target Costing Accounting Principles
Target costing accounting principles involve a strategic cost management approach that focuses on determining the maximum cost that can be incurred on a product or service in order to generate a desired profit margin. This method involves analyzing market conditions, customer needs, and competitor pricing to establish a target cost for a product or service, which then drives decision-making throughout the development and production process. By aligning costs with customer value and market demands, organizations can improve profitability and maintain a competitive edge in the marketplace.
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