The difference between the contemporary price and the goal cost is the “cost reduction,” which management wishes to achieve.
A crew is formed to combine things to do such as designing, purchasing, manufacturing, marketing, etc., to discover and gain the target cost.
6 The most important distinction between goal and kaizen costing is that target costing is applied during the graph stage whereas Kaizen costing is utilized for the duration of the manufacturing stage of a product's life
Market driven costing can go via 5 steps including: establish company's long-term income and income objective; enhance the combine of products; become aware of target selling charge for each product; discover profit margin for each product; and calculate allowable price of each product.
Learn more about cost reduction targets here:
