Excutive summary of the tc case .docx

Excutive summary of the tc case .docx - Executive Summary...

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Executive Summary The implementation of target costing begins at identification of customer’s needs and then set the target price based on market considerations. The following step is to determine the target profit margin according to the company’s required rate of return. The target cost will be derived from the difference between target price and target profit margin. The final step is to achieve the cost reduction objective which is the difference between target cost and current cost. Wanting: The key challenges of implementing the target costing approach includes firstly, the implementation may be resisted by other managers due to the company history of using cost-plus approach and the benefit of using TC approach takes a long time to emerge. Secondly, it is unfair for some departments to bear more cost reduction pressures and staff may feel insecure about their job. Thirdly, lack of
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  • Three '08
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