Implementing Target Costing
Target costing has become an important cost management method used by global manufacturers to more effectively compete in dynamic and very competitive markets. The method can help a company determine the right "bundle" of features to be included in the update of an existing product, or to determine the feasibility of a new product, among other applications. While used in Japanese industries for many years (Toyota is said to have been the first to use the method significantly) it is still being reviewed and considered by large firms throughout the world. A issues in the decision to adopt target costing include the nature of the competitive environment facing the firm and the cost/benefit of the implementation process. An example of an implementation of target costing is shown at the link below:
Required: Review the article at the link above and determine the factors you think contributed to the success of the application. Can you find additional examples of successful (or failed) applications, including the factors that contributed to success (or failure)?
