Target costing is the process of determining the maximum allowable cost for a new product and then developing a prototype that can be profitably made for that maximum cost figure.

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Target costing is a cost management tool that involves setting a target cost for a product or service and then working to achieve that cost through design, engineering, and production efforts. The goal is to ensure that the product can be sold at a competitive price while still generating a desired profit margin.

Target Costing Is the Process of Determining the Maximum Allowable