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Financial Terms | |
Target costing |
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Definition of Target costingTarget costingA method of costing that is concerned with managing whole-of-life costs of a product/service during the product design phase – the difference between target price (to achieve market share) and the target profit margin. target costinga method of determining what the cost of a
Related Terms:Current costUnder target costing concepts, this is the cost that would be applied to a Absorption costingA method of costing in which all fixed and variable production costs are charged to products or services using an allocation base. absorption costinga cost accumulation and reporting Absorption costingA methodology under which all manufacturing costs are assigned Activity-based costingA method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers. activity based costing (ABC)A relatively new method advocated for the ![]() activity-based costing (ABC)a process using multiple cost drivers to predict and allocate costs to products and services; Activity-based costing (ABC)A cost allocation system that compiles costs and assigns attribute-based costing (ABC II)an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute backflush costinga streamlined cost accounting method that speeds up, simplifies, and reduces accounting effort in an environment that minimizes inventory balances, requires direct costingsee variable costing Direct costingA costing methodology that only assigns direct labor and material costs Feasible target payout ratiosPayout ratios that are consistent with the availability of excess funds to make FIFO method (of process costing)the method of cost assignment that computes an average cost per equivalent First in, first-out costing method (FIFO)A process costing methodology that assigns the earliest ![]() full costingsee absorption costing hybrid costing systema costing system combining characteristics Job costingA method of accounting that accumulates the costs of a product/service that is produced either job order costing systema system of product costing used Kaizen costingThe process of continual cost reduction that occurs after a product life cycle costingthe accumulation of costs for activities that Lifecycle costingAn approach to costing that estimates and accumulates the costs of a product/service over modified FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per Process costingA method of costing for continuous manufacture in which costs for an accounting compared are compared with production for the same period to determine a cost per unit produced. Process costingA costing methodology that arrives at an individual product cost through the calculation of average costs for large quantities of identical products. process costing systema method of accumulating and assigning costs to units of production in companies producing large quantities of homogeneous products; relevant costinga process that compares, to the extent possible strict FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per equivalent unit and, in transferring units from a department, keeps the TargetA specific level of some economic variable that a policy attempts to maintain. Target Benefit PlanA defined benefit plan under which the employer makes Target cash balanceOptimal amount of cash for a firm to hold, considering the trade-off between the Target firmA firm that is the object of a takeover by another firm. Target payout ratioA firm's long-run dividend-to-earnings ratio. The firm's policy is to attempt to pay out a Target rate of return pricingA method of pricing that estimates the desired return on investment to be achieved from the Target zone arrangementA monetary system under which countries pledge to maintain their exchange rates Targeted repurchaseThe firm buys back its own stock from a potential bidder, usually at a substantial Variable costingA method of costing in which only variable production costs are treated as product costs and in which all fixed (production and non-production) costs are treated as period costs. variable costinga cost accumulation and reporting method weighted average method (of process costing)the method of cost assignment that computes an average cost per KaizenA method of costing that involves making continual, incremental improvements to the Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |