Target Costing

Target costing describes a process of first assessing a target price and then designing a product to meet the price.

Usually Target costing is a part of a total cost management system,leading away from traditional financial accounting to management accounting. Target costing is most beneficial to assembly-oriented industries rather than process-oriented manufacturers.it is also pointed out that target costing is more applicable for industries with frequent product changes and short product life cycles.These criteria fit many companies in the fashion driven apparel industry,where products have short seasons,and change drives the industry more than anything else.The process in the apparel industry are largely assembly oriented.

The process of target costing is supposed to be very interactive and ideally most of the process activities happen simultaneously or parallel.