Target Costing as a Strategic Controlling Instrument

Target costing, also known as “target-cost management”, can be seen as a shift in the traditional “view on costs” in corporate philosophy. “How much will the product cost?”, is not the question anymore, but “How much is a product allowed to cost?”. This means that the costs to be budgeted for a product [to be designed in future] don’t have to be determined by the current conditions for production and procurement but by the actual conditions of the market for the product in question.